Partnership Dissolution 1 of 2

CAUSES OF PARTNERSHIP DISSOLUTION

1.
2.
3.
4.

5. (T/F) Partnership Dissolution = Partnership Liquidation

6. (T/F) Consent of all partners must be obtained to admit a new partner into the partnership

For the following numbers provide the journal entries.

Admission through purchase of interest
Assume that after operations and partners’ withdrawals during 20x1 and 20x2, BlueLock Partnership has a
book value of 100,000 and P/L percentage in 20x3 as follows:

Capital Balances P&L Percentage

Blue 60,000 70%
Lock 40,000 30%
100,000 100%
On this date, Isagi is admitted into the Partnership.

Case 1: Isagi paid 24,000 directly to Blue in exchange for 1/3 interest.

Case 2: Isagi purchases a ¼ interest in the firm. ¼ of each partner’s capital is to be transferred to the new
partner. Isagi pays the partners 25,000.

Case 3: Isagi purchases a ¼ interest of Blue’s interest for 18,000 and ¼ of Lock’s interest for 12,000, making
payment directly to Blue and Lock. The new partner will have a 1/4 profit and loss ratio and the old partners
continue to use their old profit and loss ratio. Use Bonus method.

Case 4: Isagi purchases a ¼ interest of Blue’s interest for 18,000 and ¼ of Lock’s interest for 12,000, making
payment directly to Blue and Lock. The new partner will have a 1/4 profit and loss ratio and the old partners
continue to use their old profit and loss ratio. Use Goodwill/Revaluation Method.

Case 5: Isagi purchases a ¼ interest of BlueLock’s interest for 22,000, making payment directly to Blue and
Lock. The new partner will have a 1/4 profit and loss ratio and the old partners continue to use their old
profit and loss ratio. Use Bonus Method.

Case 6: Isagi purchases a ¼ interest of BlueLock’s interest for 22,000, making payment directly to Blue and
Lock. The new partner will have a 1/4 profit and loss ratio and the old partners continue to use their old
profit and loss ratio. Use Goodwill/Revaluation Method.

Admission by Investment
Assume the following data for Jujutsu Kaisen Partnership had the following condensed balance sheet:
Assets Liabilities and Capital
Cash 2,500 Liabilities 7,500
Non-Cash 32,500 Jujutsu, Capital (60%) 20,000
G, Loan 2,500 Kaisen, Capital (40%) 10,000
Total 37,500 Total 37,500
The percentage in parentheses represent their respective interests in P&L. The partners agree to admit
Gojo as a member of the firm.

Case 1: Gojo invests 10,000 for a ¼ interest in the firm. Total agreed capital is to be 40,000.
Case 2: Gojo invests 10,000 for 35% interest in the firm. Total agreed capital is to be 40,000.

Case 3: Gojo invests 10,000 for a 1/3 interest in the firm and is allowed a credit of 15,000 for his capital.

Case 4: Gojo conveyed a tangible asset with a fair value of 25,000 with an assumed mortgage of 5,000 in
exchange for a 30% interest in capital with bonus to be recognized, keeping in mind that Gojo would be
acquiring a ¼ interest in profits. Before admission of Gojo, Jujutsu Kaisen Partnership had an equipment of
4,000 with a fair value of 7,000.

Case 5: Gojo must invest or contribute cash of 24,000 equivalent to 37.5% interest in a total agreed capital
of 64,000. Included in the non cash assets is equipment undervalued by 7,000.

Case 6: Gojo Invests 10,000 for a 45% interest in the firm. The total agreed capital after admission is 50,000.

Case 7: Gojo Invests 15,000 for a 20% interest in the firm. The total agreed capital after admission is 60,000.

Case 8: Gojo Invests 15,000 for a 30% interest in the firm. The total agreed capital after admission is 60,000.

Case 9: Gojo Invests 20,000 in the firm. 5,000 is considered a bonus to Partnersh Jujutsu and Kaisen. The
book values of partnership assets and liabilities are equal to fair values, except for a machinery with a book
value of 3,000 and a fair value of 7,000.

Case 10: Gojo invests 6,000 for a 30% interest in the firm. Jujutsu and Kaisen transfer part of their capitals
to that of Gojo as a bonus. The partnership has an equipment used in business with a book value of 5,000
and a fair value of 3,000.

Case 11: Gojo invests 15,000 for a ¼ interest in the firm, Jujutsu Kaisen had other assets with a book value
of 5,500 and a fair value of 10,500. Revaluation approach is used.

Case 12: Gojo invests 20,000 in the firm and is allowed a credit of 6,000 for revaluation.

Case 13: Gojo invests 20,000 for a 50% interest in the firm. The total firm capital is to be 40,000 and partners
agreed that their capital balances should be made equal to their P&L ratio,

Case 14: Gojo invests 15,000 for a 40% capital interest and a 25% interest in profits. Use Bonus method.

Case 15: Gojo invests 15,000 for a 40% capital interest and a 25% interest in profits. Use Revaluation/GW
method.

Case 16: Gojo invests 15,000 for a 30% capital interest and a 40% interest in profits. Use Bonus method.

Case 17: Gojo invests 15,000 for a 30% capital interest and a 40% interest in profits. Use Revaluation/GW
method.