ASSIGNMENT #2

Answer the following problems and provide a supporting solution for each question.
Do this in google docs instead of spreadsheet.
1. The XKB Partnership shows the following profit and loss ratios and capital balances:
Xian 60% 252,000
Kielle 30% 126,000
Bella 10% 42,000

The partners decide to sell Ken 20% of their respective capital and profit and loss interest for a
total payment of P90,000. Ken will pay the money directly to the other partners.

Compute for the following:

a. Under the admission by purchase of interest, what would be the capital balances of all the partners after the
transfer of capital to the new partner?

Answer:
Xian 201,600
Kielle 100,800
Bella 33,600
Ken 84,000

Solution :

Capital before Admission Equity purchase Capital after Admission

P/L Equity Capital P/L Equity Capital P/L Equity Capital

Xian 60% 60% 252,000 (20%) (20%) (50,400) 40% 40% 201,600

Kielle 30% 30% 126,000 (20%) (20%) (25,200) 10% 10% 100,800

Bella 10% 10% 42,000 (20%) (20%) (8,400) (10%) (10%) 33,600

Ken 60% 60% 84,000 60% 60% 84,000

Total 100% 100% P 420,000 0 100% P 420,000

b. How much cash did old partners receive from the amount paid by Ken?
c. Make an entry to record the purchase.

2. Christine, Trisha and Karen are partners with capital balances of P300,000, P200,000 and
P100,000 respectively. Their P/L ratio is 4:3:2. Erika will invest P150,000 for 25% interest in the
partnership capital and 30% share in profit and loss.

Compute for the following:

a. Under the admission by investment, what would be the capital balances of all the partners
after the admission of the new partner?
b. How much bonus did old partners receive(give) from(to) the new partner?
c. Make an entry to record the admission of the new partner.

3. Beng wishes to purchase ¼ interest in the partnership of JV, VJ and EJ. The three partners
agree to sell Beng ¼ interest of their respective capital and P/L interest in exchange for a total
payment of P50,000. The partner’s capital account balances and P/L ratio immediately before
the admission of Beng are as follows:
Capital Balances P/L Ratio
JV P 80,000 50%
VJ 45,000 30%
EJ 25,000 20%
P 140,000 100%

All assets and liabilities are fairly valued upon the admission of Beng.

Compute for the following:

a. What should be the capital balances of all the partners after the admission of new partner?
b. How much bonus did old partners receive(give) from(to) the new partner?
c. Make an entry to record the admission of the new partner.