Partnership Dissolution
1. Answer: B. P480,000
Solution:
B, Capital – before D’s purchase of interest
D’s Capital credit (800,000 x 40%)
B, Capital – after admission of D
800,000
(320,000)
480,000
2. Answer: A. P960,000
Solution:
Since partnership is properly valued, The Bonus method will be used.
A, Capital
1,400,000
B, Capital
700,000
C, Capital
900,000
Total Capital
3,000,000
D’s investment
D’s agreed capital [ (3M + 1M) x 20% ]
Bonus to Old Partners
1,000,000
( 800,000)
200,000
C, Capital
Bonus to C (200K x 3/10)
C, Capital – after D’s admission
3. Answer: B. P300,000
Solution:
Total Agreed Capitalization
D’s Capital Interest
D’s Required Capital
900,000
60,000
960,000
3,000,000
10%
300,000
4. Answer: A. P580,000
Solution:
A, Capital
B, Capital
C, Capital
Total Capital – before D’s Admission
Agreed Capitalization
Contributed Capital (3M + 500K)
Required Revaluation of Assets (Decrease)
Less: D’s Required Capital Reduction
D’s Agreed Capitalization (3M X 10%)
D’s Investment
Required Capital Reduction to Old Partners
C, Capital
Required Capital Reduction (300K x 4/10)
C, Capital – after D’s Admission
5. Answer: D. P525,000
Solution:
1,100,000
1,200,000
700,000
3,000,000
3,000,000
(3,500,000)
(500,000)
300,000
(500,000)
700,000
(120,000)
580,000
(200,000)
(300,000)
Amount Received by C after Retirement
C, Capital – December 31
Capital Increase to C due to Asset Revaluation
350,000
(200,000)
150,000
Asset Revaluation = 150,000/60% = 250,000 (Increase)
A, Capital – December 31
Capital Increase to A from Asset Revaluation (250,000 x 1/10)
A, Capital after C’s Retirement
6. Answer: C. P316,000
Solution:
C, Capital – December 31
Amount received by C
Bonus to A and C
B, Capital – December 31
Bonus Received from C (20K x 4/5)
B, Capital after C’s Retirement
100,000
( 80,000)
20,000
300,000
16,000
316,000
7. Answer: D. P21,875,000
Solution:
U, Capital – unadjusted
Capital Increased from PPE Revaluation (15M x 2/10)
Capital Decreased from Overstatement of Net Income (5M x 2/10)
U, Capital – adjusted
Bonus Received from Partners F and C
Received by U during retirement
F, Capital – unadjusted
Capital Increased from Revaluation of PPE (15M x 3/10)
Capital Decreased from Overstatement of Net Income (5M x 3/10)
F, Capital – adjusted
Bonus transferred to U (3M x 3/8)
F, Capital after retirement of U
8. Answer: D. P588,000
Solution:
S, Capital
A, Capital
T, Capital
Total Capital of Old Partners
Bonus given to D
Capital Retained by Old Partners (S,A, T)
Agreed Capital Credit for D [(3,969,000/75%) x 25%]
Bonus Received from Old Partners
Cash Investment Required for D
9. Answer: C. P50,000
Solution:
500,000
25,000
525,000
10,000,000
3,000,000
(1,000,000)
12,000,000
3,000,000 (*squeeze)
15,000,000
20,000,000
4,500,000
(1,500,000)
23,000,000
(1,125,000)
21,875,000
784,000
2,730,000
1,190,000
4,704,000
( 735,000)
3,969,000 (75%)
1,323,000
( 735,000)
588,000
E, Capital
L, Capital
Total Capital Old Partners
Bonus Received from new Partner
Capital Retained by Old Partners
30,000
70,000
100,000
18,250
118,250 (55%)
Required Capital Credit to R [(118,250/55%) x 20%]
Required Capital Credit to L [(118,250/55%) x 25%]
Total Required Capital Credit to New Partners
Cash Investment of R
Bonus Given by New Partners to Old Partners
Required Total Investment of L
Cash Investment of L
Amount of Equipment Contributed by L
10. Answer: C. P181,000
Solution:
Juliet, Capital
Kilo, Capital
Total Capital of Old Partners
43,000
53,750
96,750
(55,000)
18,250
60,000
( 10,000)
50,000
200,000
220,000
420,000
Lima’s Agreed Capital [(420K + 180K) x 40%
Lima’s Investment
Bonus Received from Old Partners
240,000
(180,000)
60,000
Kilo, Capital – before Lima’s Admission
Capital Transferred to Lima (60K x 65%)
Kilo, Capital – After Lima’s Admission
220,000
(39,000)
181,000
11. Answer: A. P231,000
Solution:
Juliet, Capital – before Lima’s Admission
Capital Transferred to Lima (60K x 35%)
Juliet, Capital – After Lima’s Admission
Share of Profit (130K x 40%)
Juliet, Capital – at year end
200,000
(21,000)
179,000
52,000
231,000
12. Answer: B. (P150,000)
Solution:
Agreed Capitalization (180K/40%)
Contributed Capital (420K + 180K)
Overvaluation of Asset
450,000
(600,000)
(150,000)
13. Answer: D. P174,500
Solution:
Agreed Capitalization (180K/40%)
Contributed Capital (420K + 180K)
Overvaluation of Asset
450,000
(600,000)
(150,000)
Kilo, Capital – before Lima’s Admission
Capital Reduction for Overvaluation of Asset (150K x 65%)
Kilo – Capital – after Lima’s admission
Share of Profit (130K x 40%)
Kilo, Capital – at year end
220,000
(97,500)
122,500
52,000
174,500