Problem #1

Admission by Purchase of Interest or Investment of Assets

Mallari and Chua are partners who share profits and losses in a ratio of 3:2, respectively. They have the
following capital balances on Sept. 30, 2019:

Mallari, Capital Chua, Capital

P250,000 Cr. P500,000 Cr.

The partners agreed to admit Palatino to the partnership.

Required: Calculate the capital balances of each partner after the admission of Palatino, assuming that
bonuses are recorded when appropriate for each of the following assumptions:

1. Palatino paid Mallari P250,000 for 50% of his interest.

2. Palatino invested P250,000 for a one-fourth interest in the partnership.

3. Palatino invested P250,000 for a 30% interest in the partnership.

4. Palatino invested P250,000 for a 20% interest in the partnership.

Problem #2

Admission by Purchase of Interest or Investment of Assets

Castro and Falceso are partners who share profits and losses in a ratio of 2:3, respectively, and have the
following capital balances on Sept. 30, 2020: Castro, Capital, P100,000 Cr. and Falceso, Capital, P150,000
Cr. The partners agreed to admit Garachico to the partnership.

Required: Calculate the capital balances of each partner after the admission of Garachico, assuming that
bonuses are recorded when appropriate for each of the following assumptions:

1. Garachicho paid Castro P50,000 for 40% of his interest.

2. Garachico invested P50,000 for a one-sixth interest in the partnership.

3. Garachico invested P50,000 for a 25% interest in the partnership.

4. Garachico invested P50,000 for a 15% interest in the partnership.

Problem #3

Admission by Purchase of Interest or Investment of Assets

Dolores Aguilar, Isolde Sustrina, and Beth Bigalbal are partners in Cavite Realty Company. Their capital
balances as at July 31, 2019, are as follows:

Aguilar, Capital Sustrina, Capital Bigalbal, Capital

450,000 150,000 300,000

Each partner has agreed to admit Nelia Pascual to the partnership.

Required:

Prepare the entries to record Pascual’s admission to or Aguilar’s withdrawal from the partnership under
each of the following conditions:

a. Pascual paid Aguilar P125,000 for 20% of Aguilar’s interest in the partnership.

b. Pascual invested P200,000 cash in the partnership and received an interest equal to her investment.

c. Pascual invested P300,000 cash in the partnership for a 20% interest in the business. A bonus is to be
recorded for the original partners on the basis of their capital balances.

d. Pascual invested P300,000 cash in the partnership for a 40% interest in the business. The original
partners gave Pascual a bonus according to the ratio of their capital balances on July 31, 2019.

e. Aguilar withdrew from the partnership, taking P525,000. The excess of withdrawn assets over
Aguilar’s partnership interest is distributed according to the balances of the Capital accounts.

f. Aguilar withdrew by selling her interest directly to Pascual for P600,000.

Problem #4

Withdrawal of a Partner

Gregorio is retiring from the partnership of Guerra, Guillermo, and Gregorio. The profit and loss ratio is
2:2:1, respectively. After the accountant has posted the revaluation and closing entries, the credit
balances in the Capital accounts are: Guerra, P530,000; Guillermo, P430,000; and Gregorio, P210,000.

Required: Journalize the journal entries to record the retirement of Gregorio under each of the following
unrelated assumptions:

1. Gregorio retires, taking P210,000 of partnership cash for her equity.

2. Gregorio retires, taking P270,000 of partnership cash for her equity.

Problem #5

Withdrawal of a Partner

On July 10, 2019, Partner Ibrahim decided to withdraw from Cebedo, Basa and Ibrahim Partnership.
Their profit and loss ratio is 3:2:1, respectively. Partnership assets are to be used to acquire Ibrahim’s
partnership interest. The statement of financial position for the partnership on that date follows:
Cebedo, Basa and Ibrahim

Statement of Financial Position

July 10, 2019

Assets Liabilities and Partner’s Capital

Cash P 74,000 Liabilities P 45,000

Trade Accounts Receivable (net) 36,000 Cebedo, Capital 120,000

Plants Assets (net) 135,000 Basa, Capital 60,000

Goodwill (net) 30,000 Ibrahim, Capital 50,000

Total P275,000 Total P275,000

Required:

Prepare the journal entries to record Ibrahim’s withdrawal under each of the following assumptions:

1. Ibrahim is paid P54,000, and the excess amount paid over Ibrahim’s capital account balance is
recorded as a bonus to Ibrahim from Cebedo and Basa.

2. Ibrahim is paid P45,000, and the difference is recorded as a bonus to Cebedo and Basa from Ibrahim.

3. Ibrahim accepted cash of P40,500 and plant assets (equipment) with a current fair value of P9,000.
The equipement had cost P30,000 and was 60% depreciated, with no residual value (Record any gain or
loss on the disposal of the equipment in the partner’s capital accounts).