BM1705

Mimi DATE: Dec. 17, 2021 SCORE:

Gigi
Lulu
A
B
C

Admission of New Partner (7 points)

Mimi and Gigi are partners sharing profits and losses in the ratio of 2:3 with capitals of P9,000 and P15,000,
respectively. Lulu is to be admitted into the partnership after which they will share profits and losses equally. The books
of the old partnership will still be used by the new partnership.

Requirement: Give the entry to record the admission of Lulu under each of the following independent assumptions.
Show also the comparative capital structure and interest of each partner in relation to the total capital before and after the
admission of Lulu.
1. Lulu buys 1/4 the interest of Mimi for P3,000. (2 points: 1 point for each correct account and amount
used)
2. Lulu buys 1/5 the interest of Gigi for P2,000. (2 points: 1 point for each correct account and amount
used)
3. Lulu buys 1/2 the interest of Mimi for P5,000 and 1/4 the interest of Gigi for P6,000. (3 points: 1 point for
each correct account and amount used)

Answers:

1. Lulu buys 1/4 the interest of Mimi for P3,000. (2 points: 1 point for each correct account and amount
used)

Entry:
Particular Debit Credit
Mimi, Capital 2,250
Lulu, Capital 2,250

Partners Mimi Gigi Lulu Total

Before 9,000 15,000 24,000
Admission 2,250 2,250
After 6,750 15,000 2,250 24,000

2. Lulu buys 1/5 the interest of Gigi for P2,000. (2 points: 1 point for each correct account and amount
used)

Entry:
Particular Debit Credit
Gigi, Cap 1,800
Lulu, Capital 1,800

Partners Mimi Gigi Lulu Total

Before 9,000 15,000 24,000
Admission 1,800 1,800
After 9,000 13,200 1,800 24,000

3. Lulu buys 1/2 the interest of Mimi for P5,000 and 1/4 the interest of Gigi for P6,000. (3 points: 1 point for each
 correct account and amount used)

Entry:
Particular Debit Credit
Mimi, Capital 4,500
Gigi, Capital 3,750
Lulu, Capital 8,250

Partners Mimi Gigi Lulu Total

Before 9,000 15,000 24,000
Admission 4,500 3,750 8,250
After 4,500 11,250 8,250 24,000

Withdrawal of a Partner (7 points)

A, B, and C are partners with capital balances on December 31, 200D of P450,000, P450,000, and P300,000,
respectively. Profits are shared equally. C wishes to withdraw and it is agreed that he is to take certain furniture and
fixtures at their second-hand value of P18,000 and note for the balance of his interest. The furniture and fixtures are
carried on the books as fully depreciated. Brand new, the furniture and fixtures may cost P30,000. Give the entries
necessary to record the withdrawal of C. (7 points: 1 point for each correct account and amount used)

Particulars Debit Credit

Reference:
Abeleda, N. S. (2012). Simplified accounting for partnership and corporation. Parañaque: Nelson Publications.