The partnership of Ben, Larry, and Dan reflected beginning capital balances of P150,000; P50,000 and P200,000 and

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Question:

The partnership of Ben, Larry, and Dan reflected beginning capital balances of P150,000; P50,000 and P200,000 and profit and loss ratios of 5:4:1 to Ben, Larry and Dan respectively. The partners plan to dissolve their business. The following are independent assumptions with regard to the partnership’s dissolution.

1. Daisy is to be admitted in the partnership upon purchasing ¼ of the capital of Ben and Dan for P50,000 with the assets being adjusted. Determine the capital balance of Larry after Daisy’s admission into the partnership.

2. Daisy is to be admitted in the partnership upon investing her business in the partnership for a 20% in the partnership with a total agreed capital balance of P450,000. Daisy’s net assets have a book value of P25,000 and fair value of P30,000. Determine the capital balance of Ben after Daisy’s admission in the partnership.

3. Daisy is to invest P50,000 for a 10% interest in the new partnership and is to be credited the same amount of capital in the new partnership. Determine the capital balance of Larry after Disney’s admission into the partnership.

4. Daisy is to purchase 1/5 of the capital balance of Ben for P40,000 with the assets being adjusted and is to invest P30,000 for a 15% interest in the partnership with a total agreed capital of P550,000. Determined the capital balance of Ben and Dan after Daisy’s admission into the partnership.

5. Larry decides to retired from the partnership after the distribution of net income of P75,000. The partners distribute net income be giving salaries of P20,000 each with the balance being distributed based on their profit and loss ratios. If Larry received P80,000 from the partnership, determine the capital balance of Ben and Dan after Larry’s withdrawal from the partnership.

Problem 2: A partnership had the following condensed balance sheet:

Assets		Liabilities and Capital
Cash	P5,000	Liabilities	P15,000
Non-cash	65,000	Rachel, Capital (80%)	40,000
Rachel, loan	5,000	Sarah, Capital (20%)	20,000
Total	75,000

The percentages in parenthesis after the partners’ capital balances represent their respective interests in profits and losses. The partners agree to admit Cecilia as a member of the firm.

From the following independent situations, determine the journal entries that would be made by the partnership to record the admission of Cecilia in the new partnership.

Situation 1. Cecilia purchases a ¼ interest in the firm. One-fourth of each partner’s capital is to be transferred to the new partner. Claudine pays the partners P20,000, which is divided between the in proportion to the equities given up.

Situation 2. Cecilia purchases a ¼ interest in the firm. One-fourth of each partner’s capital is to be transferred to the new partner. Caludine pays the partners P20,000, which is divided between them in proportion to the equities given up. The assets are to be revalued prior to Cecilia’s admission.

Situation 3. Cecilia purchases a ¼ interest in the firm. One-fourth of each partner’s capital is to be transferred to the new partner. Claudine pays the partners P12,000 which is divided between them in proportion to the equities given up. The assets are to be revalued prior to Cecilia’s admission.

Situation 4. Cecilia invests P25,000 for a ¼ interest in the firm. The total agreed capital of the new partnership is P85,000.

Situation 5. New partner Cecilia conveyed a tangible asset with FV of P32,500 with an assumed mortgage of P5,000 in exchange for a 35% interest in capital of the new partnership. Cecilia however would be acquiring a ¼ interest in profits. Situation 6. New partner Cecilia conveyed a non-cash assets with a fair value of P15,000 in exchange for a 30% interest in capital and a 1/5 interest in profits. The total agreed capital after admission is P80,000. Situation 7. Cecilia invests P15,000 for a 40% interest in the firm.