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Working Papers For Partnership Dissolution
Working Papers For Partnership Dissolution
A, Capital 50,000
C, Capital 50,000
(150,000 x 10%/30%)
Illustration 2
The capital accounts of A & B Company before the admission of C are
follows:
Capital accounts P/L ratios
A, Capital 150,000 30%
B, Capital 250,000 70%
400,000
Required:
a. Prepare the journal entry to record the admission of C
b. Compute capital balances of the partners after the admission of C
Building 200,000
A, Capital (200,000 x 30%) 60,000
B, Capital (200,000 x 70%) 140,000
To record the revaluation of the building
A B C TOTAL
Beg. Capital 150,000 250,000 - 400,000
Share in valuation 60,000 140,000 200,000
Credit 60,000 60,000
Debit -18,000 -42,000 -60,000
End capital 192,000 348,000 60,000 600,000
Illustration 1
Diala, Austria, and Tamayo are partners in Lavander Company.
Their capital balances as at July 31, 2023 are as follows:
Prepare the entries to record Miranda's admission to the partnership under each of the
following conditions:
a. Miranda paid Diala P125,000 for 20% of Diala's interest in the partnership
Diala, Capital (450,000 x 20%) 90,000
Miranda, Capital
Cash 200,000
Miranda, Capital 200,000
c. Miranda invested P300,000 cash in the partnership for 20% interest in the
business. A bonus is to be recorded for the original partners on the basis of
their capital balances
AC CC
Old partners (80%) 960,000 900,000
New partner (20%) 240,000 300,000
1,200,000 1,200,000
Cash 300,000
Diala, Capital (60,000 x 450/900)
Austria, Capital (60,000 x 150/900)
Tamayo, Capital (60,000 x 300/900)
Miranda, Capital
d. Miranda invested P300,000 cash in the partnership for 40% interest in the
business. The original partners gave Miranda a bonus according to the ratio of
their capital balance on July 31, 2023.
AC CC
Old partners (60%) 720,000 900,000
New partner (40%) 480,000 300,000
1,200,000 1,200,000
Cash 300,000
Diala, Capital (180,000 x 450/900) 90,000
Austria, Capital (180,000 x 150/900) 30,000
Tamayo, Capital (180,000 x 300/900) 60,000
Miranda, Capital
Illustration 2
Padilla and Tan are partners in Nayon Partnership with capital balances of P550,000 an
P350,000 respectively. They share income and loss in the ratio of 1:3, respectively. Th
partners are considering the admission of Conde.
Cash 140,000
Equipment 80,000
Padilla, Capital (80,000 x 1/4)
Tan, Capital (80,000 x 3/4)
Conde, Capital
Tamayo, Capital
300,000
90,000
Bonus/AR
-
-
-
Bonus/AR
60,000
- 60,000
-
30,000
10,000
20,000
240,000
Bonus/AR
- 180,000
180,000
-
480,000
ssion of Conde
Bonus/AR
80,000
-
80,000
20,000
40,000
140,000
Illustration 1
The capital account balances of the partners in ABC Partnership
on July 1, 2023 before any necessary adjustments are as follows:
Capital accounts
A, Capital (20%) 150,000
B, Capital (30%) 250,000
C, Capital (50%) 100,000
500,000
A (20%) B (30%)
Unadjusted balance 150,000 250,000
Share in profit 180,000 270,000
Adjusted balance 330,000 520,000
C, Capital 550,000
A, Capital (550,000 x 20%/50%)
B, Capital (550,000 x 30%/50%)
To record withdrawal of C
The capital account balances of the partners in ABC Partnership
on July 1, 2023 before any necessary adjustments are as follows:
Capital accounts
A, Capital (20%) 150,000
B, Capital (30%) 250,000
C, Capital (50%) 100,000
500,000
C, Capital 550,000
A, Capital (620,000 -550,000) x 20%/50% 28,000
B, Capital (620,000 -550,000) x 30%/50% 42,000
Cash
A B
Adjusted balance 330,000 520,000
Debit - 28,000 -42,000
302,000 478,000
C (50%) TOTAL
100,000 500,000
450,000 900,000
550,000 1,400,000
180,000
270,000
450,000
220,000
330,000
620,000
Total
850,000
-70,000
780,000
Purchase of Interest
Illustration 1
The capital accounts of A & B Company before the admission of C are are
follows:
Capital accounts P/L ratios
A, Capital 150,000 30%
B, Capital 250,000 70%
400,000
C purchases 10% interest of out of the 30% interest of A for P100,000. The net assets of the firms as of this approximate their fair values.
Illustration 2
The capital accounts of A & B Company before the admission of C are are
follows:
Capital accounts P/L ratios
A, Capital 150,000 30%
B, Capital 250,000 70%
400,000
C purchases proportionate interest from A and B representing 10% interest in the partnership for P100,000. The net assets of the firm
as of this date approximate their fair values.
Requirement (a):
A, Capital (400,000 x 10% x 30%) 12,000
B, Capital (400,000 x 10% x 70%) 28,000
Date
C, Capital (400,000 x 10%) 40,000
Date
Requirement (b):
A B C Totals
Capital, beg. 150,000 250,000 - 400,000
Credit - - 40,000 40,000
Debit -12,000 - 28,000 - - 40,000
Capital, end. 138,000 222,000 40,000 400,000
Revaluation of Assets
Illustration 1
The capital accounts of A & B Company before the admission of C are followsL
Capital accounts P/L ratios
A, Capital 150,000 30%
B, Capital 250,000 70%
400,000
C was admitted to the partnership when he purchased a proportionate interest from A and B representing 10% interest in the partnership for
P100,000. However, before the admission of C, it was found out that the building of the partnership is undervalued by P200,000.
Required: Provide the journal entries to record the revaluation of the building and the admission of C.
Investment in Partnership
Illustration 1
Diala, Austria, and Tamayo are partners in Lavander Company.
Their capital balances as at July 31, 2023 are as follows:
Prepare the entries to record Miranda's admission to the partnership under each of the
following conditions:
a. Miranda paid Diala P125,000 for 20% of Diala's interest in the partnership
Diala, Capital (450,000 x 20%) 90,000
Miranda, Capital 90,000
c. Miranda invested P300,000 cash in the partnership for 20% interest in the
business. A bonus is to be recorded for the original partners on the basis of
their capital balances
AC CC Bonus/AR
Old (80%) 960,000 900,000 60,000
New (20%) 240,000 300,000 - 60,000
1,200,000 1,200,000 -
Cash 300,000
Diala, Capital (60,000 x 450/900) 30,000
Austria, Capital (60,000 x 150/900) 10,000
Tamayo, Capital (60,000 x 300/900) 20,000
Miranda, Capital 240,000
d. Miranda invested P300,000 cash in the partnership for 40% interest in the
business. The original partners gave Miranda a bonus according to the ratio of
their capital balance on July 31, 2023.
AC CC Bonus/AR
Old 720,000 900,000 - 180,000
New 480,000 300,000 180,000
1,200,000 1,200,000 -
Cash 300,000
Diala, Capital (180,000 x 450/900) 90,000
Austria, Capital (180,000 x 150/900) 30,000
Tamayo, Capital (180,000 x 300/900) 60,000
Miranda, Capital 480,000
Illustration 2
Padilla and Tan are partners in Nayon Partnership with capital balances of P550,000 and P350,000 respectively. They share income and loss in the ratio of 1:3, respectively. The
partners are considering the admission of Conde.
Conde invested P140,000 cash in partnership for a one-eight interest. Assets of the partnership are fairly valued except for equipment, which is undervalued by P80,000
Net assets of the partnership are to be revalued and Conde is to be admitted.
Cash 140,000
Equipment 80,000
Padilla, Capital 20,000
Tan, Capital 60,000
Conde, Capital 140,000
Withdrawal
Illustration 1
The capital account balances of the partners in ABC Partnership on July 1, 2023 before any necessary adjustments are as follows:
Capital accounts
A, Capital (20%) 150,000
B, Capital (30%) 250,000
C, Capital (50%) 100,000
500,000
The partnership reported profit of P900,000 for the six months ended July 31, 2023
On July 1, 2023, C withdraws from the partnership when he was bought-out by his co-partners for P620,000 cash. The net assets of the firm as of this date
approximate their fair values.
C, Capital 550,000
A, Capital (550,000 x 20%/50%) 220,000
B, Capital (550,000 x 30%/50%) 330,000
To record withdrawal of C
Illustration 2
The capital account balances of the partners in ABC Partnership on July 1, 2023 before any necessary adjustments are as follows:
Capital accounts
A, Capital (20%) 150,000
B, Capital (30%) 250,000
C, Capital (50%) 100,000
500,000
The partnership reported profit of P900,000 for the six months ended July 31,2023
C retires on July 2023. It was agreed that C shall receive P620,000 cash from the partnership as settlement of his interest.
Required: Prepare journal entries
C, Capital 550,000
A, Capital (620,000 - 550,000) x 20%/50% 28,000
B, Capital (620,000 - 550,000) x 30%/50% 42,000
Cash 620,000