Solution manual advanced accounting by baysa lupisan chapter 02

1 CHAPTER Partnership Dissolution EXERCISES Exercise – 1 Sales, Capital Rosales, Capital 140,000 140,000 P280,000 + P320,000 + P200,000 = P800,000 Exercise –2 Total capital (P3,000,000 / 80%) Capital interest of Fidel Cash to be contributed by Fidel Cash Fidel, Capital P3,750,000 x 20% P 750,000 750,000 750,000 Exercise – Centeno, Capital Corales, Capital 40,000 Other Assets Cortes, Capital Centeno, Capital Claudio, Capital P140,000/ ¼ = P560,000 – (P200,000 + P 160,000 + P120,000) 80,000 Cortes, Capital P200,000 + P50,000 x 1/4 Centeno, Capital P160,000 + P20,000 x 1/4 Claudio, Capital P120,000 + P10,000 x 1/4 Corales, Capital 62,500 45,000 32,500 40,000 50,000 20,000 10,000 140,000 Cash 230,000 Cortez, Capital Centeno, Capital Claudio, Capital Corales, Capital old (3/4) new (1/4) 32,812 13,125 6,563 177,500 AC P532,500 177500 P710,000 CC P480,000 230,000 P710,000 Bonus_ P52,500 (52,500) P -0 - AA - Chapter (2008 edition) page Exercise – Conde, Capital Cuenco, Capital Catral, Capital 90,000 60,000 150,000 Other Assets Conde, Capital Cuenco, Capital 360,000 Conde, Capital P270,000 + 270,000 x 1/3 Cuenco, Capital P180,000 + P90,000 x 1/3 Catral, Capital 180,000 90,000 Cash 270,000 270,000 90,000 270,000 Conde, Capital Cuenco, Capital Catral, Capital old (3/4) new (1/4) 67,500 22,500 180,000 AC P540,000 180,000 P720,000 CC P450,000 270,000 P720,000 Bonus_ P90,000 (90,000) P -0 - Cash Other Assets Conde, Capital Cuenco, Capital Catral, Capital old (3/4) new (1/4) 270,000 360,000 270,000 90,000 270,000 AC P 810,000 270,000 P1,080,000 CC P450,000 270,000 P720,000 Asset Re P360,000 P360,000 Cash Conde, Capital Cuenco, Capital Catral, Capital 270,000 67,500 22,500 360,000 Exercise 2-5 1a Bonus Method Cash Alba, Capital Medel, Capital Almeda, Capital old (3/4) new (1/4) 1b 180,000 6,000 9,000 195,000 AC P585,000 195,000 P780,000 CC P600,000 180,000 P780,000 Bonus_ P(15,000) 15,000 P -0 - Revaluation of Assets Method (AC = P180,000 ÷ 1/4 = P720,000) AA - Chapter (2008 edition) page Alba, Capital (P60,000 x 40%) Medel, Capital (P60,000 x 60%) Other Assets (P780,000 - P720,000) To record revaluation of assets 24,000 36,000 60,000 Cash Almeda, Capital 180,000 180,000 Balances under the bonus method Alba P194,000 Medel P391,000 Almeda P195,000 Balances under the asset rev method Additional depreciation Balances after depreciation P200,000 ( 6,666) P193,334 P400,000 ( 6,667) P393,333 P200,000 ( 6,667) P193,333 Net advantage to Medel using the asset revaluation method P 2,333 Exercise - Garces, Capital Kalaw, Capital P120,000 x 1/2 = P60,000 60,000 Cash Other Assets (P400,000 – P320,000) Kalaw, Capital Garces, Capital (P100,000 x 3/8) Hilario, Capital (P100,000 x 3/8) Juan, Capital (P100,000 x 2/8) Total agreed capital Total capital contribution Asset revaluation 60,000 80,000 60,000 40,000 37,500 37,500 25,000 P400,000 320,000 P 80,000 Interest acquired from Garces Cash invested in the partnership Total Capital credit of Kalaw Bonus to old partners P 60,000 60,000 P 120,000 100,000 P 20,000 Exercise – Bonus method Capital before admission of Estacio Contribution of Estacio Bonus to old partners Capital after admission of Estacio Sabado P1,000,000 Galman P800,000 24,000 P1,024,000 16,000 P816,000 Sabado P1,000,000 Galman P800,000 Estacio P500,000 ( 40,000) P460,000 Total P1,800,000 500,000 P2,300,000 Asset Revaluation method Capital before admission of Estacio Contribution of Estacio Estacio P500,000 Total P1,800,000 500,000 AA - Chapter (2008 edition) page Adjustment of fixed assets to fair value Capital after admission of Estacio 120,000 P1,120,000 80,000 P880,000 P500,000 200,000 P2,500,000 Exercise – Bonus method Capital balances before admission of new partners Contributions of new partners Bonus to old partners Capital balances after admission of new partners Noble Calma P64,000 P136,000 10,950 25,550 P74,950 P161,550 Reyes Naval P110,000 ( 24,000) P120,000 ( 12,500) P86,000 P107,500 Cash Equipment Noble, Capital Calma, Capital Reyes, Capital Naval, Capital Total P200,000 230,000 P430,000 130,000 100,000 10,950 25,550 86,000 107,500 Asset Revaluation method Capital balances before admission of new partners Adjustment of assets to FV Contributions of new partners Capital balances after admission of new partners Noble Calma P64,000 9,000 P136,000 21,000 P73,000 P157,000 Reyes Naval Total P110,000 P120,000 P200,000 30,000 230,000 P110,000 P120,000 P460,000 Cash Equipment Inventory Land Building Noble, Capital Calma, Capital Reyes, Capital Naval, Capital Exercise - 1a Bonus Method Songco, Capital Bueno, Capital Manzano, Capital Cash/Payable to Songco 1b Asset Revaluation Method Songco, Capital Other Assets (P10,000 ÷ 1/6) Bueno, Capital (P50,000 x 3/5) Manzano, Capital (P50,000 x 2/5) Cash/ Payable to Songco 130,000 84,000 14,000 80,000 48,000 9,000 21,000 110,000 120,000 200,000 60,000 40,000 300,000 200,000 600,000 300,000 200,000 300,000 AA - Chapter (2008 edition) page The bonus method will be preferred by Manzano Capital of Manzano after retirement Additional depreciation Capital of Manzano after additional depreciation Net advantage to Manzano with the use of the bonus method Bonus Method P260,000 P260,000 Asset Rev P500,000 300,000 P200,000 P60,000 Exercise – 10 Delfin, Capital Damian, Capital Dencio, Capital 400,000 Delfin, Capital Cash Damian, Capital Dencio, Capital 400,000 Other Assets Delfin, Capital Cash Damian, Capital Dencio, Capital P460,000 – P400,000 = P60,000/ 1/3 = P180,000 180,000 400,000 200,000 200,000 320,000 40,000 40,000 460,000 60,000 60,000 Exercise – 11 Guzman, Capital January Drawing Share in net profit Interest of Guzman upon retirement P100,000 (16,000) 24,000 P108,000 Other Assets Guzman, Capital Cash Jorge, Capital Lopez, Capital P120,000 – P108,000 = P12,000/ 30% = P40,000 40,000 108,000 Guzman, Capital Jorge, Capital Lopez, Capital Cash 108,000 5,143 6,857 120,000 12,000 16,000 120,000 Exercise – 12 Building Villa, Capital 200,000 60,000 AA - Chapter (2008 edition) page Belen, Capital Marcos, Capital Cordero, Capital 40,000 80,000 20,000 Belen, Capital Cash 140,000 Villa, Capital Belen, Capital Marcos, Capital Cordero, Capital Cash 15,000 100,000 20,000 5,000 140,000 140,000 Exercise - 13 Galang, Capital Henio, Capital Israel, Capital Cash 12,000 8,000 140,000 Israel, Capital Galang, Capital 140,000 Israel, Capital Cash Galang, Capital Henio, Capital 140,000 Other Assets Israel, Capital Cash Galang, Capital Henio, Capital 48,000 140,000 Israel, Capital Galang, Capital Henio, Capital Cash Other Assets Israel, Capital Henio, Capital 140 000 60,000 40,000 160,000 140,000 130,000 6,000 4,000 148,000 24,000 16,000 120,000 120,000 140,000 140,000 PROBLEMS Problem - 1 Locsin, Capital (P240,000 x 1/4) Montes, Capital (P120,000 x 1/4) Nava, Capital 60,000 30,000 Locsin, Capital (P240,000 x 1/3) Montes, Capital (P120,000 x 1/3) 80,000 40,000 90,000 AA - Chapter (2008 edition) page Nava, Capital 120,000 Other Assets Locsin, Capital (P180,000 x 3/4) Montes, Capital (P180,000 x 1/4) P540,000 – P360,000 = P180,000 180,000 Locsin, Capital [(P240,000 + P135,000) 1/3] Montes, Capital [(P120,000 + P45,000) 1/3] Nava, Capital 125,000 55,000 Cash Locsin, Capital (P90,000 x 3/4) Montes, Capital (P90,000 x 1/4) Nava, Capital AC old (1/2) 270,000 new (1/2) 270,000 540,000 180,000 67,500 22,500 135,000 45,000 180,000 270,000 CC 360,000 180,000 540,000 Cash Other Assets Nava, Capital Locsin, Capital (P60,000 x 3/4) Montes, Capital (P60,000 x 1/4) AC CC old (3/4) 540,000 360,000 new (1/4) 180,000 180,000 720,000* 540,000 *180,000 ÷ 1/4 = 720,000 Bonus (90,000) 90,000 180,000 180,000 180,000 135,000 45,000 Asset Rev 180,000 180,000 Cash Nava, Capital Locsin, Capital (P60,000 x 3/4) Montes, Capital (P60,000 x 1/4) 240,000 Cash Locsin, Capital Montes, Capital Nava, Capital 240,000 54,000 18,000 Cash Locsin, Capital (P22,500 x 3/4) Montes, Capital (P22,500 x 1/4) Nava, Capital (P510,000 x 1/4) 150,000 Cash Other Assetsl (P660,000 – P525,000) Locsin, Capital (P135,000 x 3/4) Montes, Capital (P135,000 x 1/4) Nava, Capital (P660,000 x 1/4) 165,000 135,000 180,000 45,000 15,000 312,000 16,875 5,625 127,500 101,250 33,750 165,000 AA - Chapter (2008 edition) 10 page Cash Locsin, Capital (P24,000 x 3/4) Montes, Capital (P24,000 x 1/4) Nava, Capital (P504,000 x 1/3) 144,000 18,000 6,000 168,000 Problem - a Ponce, Capital (P300,000 x ½) Anton, Capital b c b c 150,000 Ponce, Capital (P300,000 x ¼) Salva, Capital (P200,000 x ¼) Victa, Capital (P100,000 x ¼) Anton, Capital 75,000 50,000 25,000 150,000 Cash Ponce, Capital Salva, Capital Victa, Capital Anton, Capital Ponce Salva Victa Anton a 150,000 220,000 7,500 4,500 3,000 205,000 AC P307,500 204,500 103,000 205,000 P820,000 CC P300,000 200,000 100,000 220,000 P820,000 Bonus P 7,500 4,500 3,000 ( 15,000) Other Assets Ponce, Capital Salva, Capital Victa, Capital P960,000 – P600,000 = P360,000 360,000 Ponce, Capital Anton, Capital 240,000 Other Assets Ponce, Capital Salva, Capital Victa, Capital P180,000/ 25% = P720,000 – P600,000 = P120,000 120,000 180,000 108,000 72,000 240,000 60,000 36,000 24,000 Ponce, Capital Salva, Capital Victa, Capital Anton, Capital 90,000 59,000 31,000 Other Assets Ponce, Capital Salva, Capital Victa, Capital P220,000/ 25% = P880,000 – P820,000 = P60,000 60,000 180,000 30,000 18,000 12,000 AA - Chapter (2008 edition) page Cash Anton, Capital 220,000 220,000 Problem 2-3 1.a Cash Cabral, Capital Corpus, Capital Carlos, Capital Other Assets Camus, Capital old (3/4) new (1/4) b 90,000 22,500 18,000 4,500 45,000 90,000 AC 630,000 90,000 720,000* CC 675,000 90,000 765,000 Asset Rev (45,000) (45,000) Cash Cabral, Capital Corpus, Capital Carlos, Capital Camus, Capital old (1/2) new (1/2) 2.a b 90,000 2,813 2,250 562 95,625 AC 669,375 95,625 765,000 CC 675,000 90,000 765,000 Cabral, Capital Corpus, Capital Carlos, Capital Camus, Capital Other Assets Cabral, Capital Corpus, Capital Carlos, Capital P90,000/ 1/8 = P720,000 – P675,000 = P45,000 40,500 27,000 16,875 Cabral, Capital Corpus, Capital Carlos, Capital Camus, Capital 43,312 29,250 17,438 Problem - a Inventories Accumulated Depreciation – Equipment Allowance for Doubtful Accounts Accrued Liabilities Roces, Capital (P6,750 x 60/100) Lapuz, Capital (P6,750 x 40/100) b Bonus (5,625) 5,625 - Cash Doria, Capital P187,500/80% = P234,375 x 20% = P46,875 84,375 45,000 22,500 18,000 4,500 90,000 5,625 7,500 3,450 2,925 4,050 2,700 46,875 46,875 AA - Chapter (2008 edition) c page 10 Lapuz, Capital Roces, Capital Roces = (P234,375 x 50%) – P103,800 = P13,388 Lapuz = (P234,375 x 30%) - P83,400 = (P13,388) 13,388 13,388 Roces, Lapuz and Doria Statement of Financial Position April 1, 2008 ASSETS Cash Receivables P69,000 Less Allow for DA 3,450 Inventories Equipment P52,500 Less Acc Depr 26,250 TOTAL ASSETS LIABILITIES and PARTNERS’ CAPITAL P 82,875 Payables P66,750 Accrued Liabilities 2,925 65,550 Roces, Capital P117,188 129,375 Lapuz, Capital 70,312 Doria, Capital 46,875 234,375 26,250 TOTAL LIABILITIES and P304,050 PARTNERS’ CAPITAL P304,050 Problem -5 Roldan Angeles Bal.before admission of Moreno P150,000 P180,000 Transfer of 1/6 int to Moreno (30,000) Investment of Moreno Asset revaluation 6,000 6,000 Bonus to old partners 6,000 6,000 Capital balances after admission of Moreno P162,000 P162,000 Roldan 30% x 75% = 22.5% Angeles 30% x 75% = 22.5% Lazaro 40% x 75% = 30% Moreno 25% Lazaro P300,000 Moreno Total P630,000 P 30,000 150,000 8,000 8,000 P316,000 150,000 20,000 (20,000) P160,000 P800,000 Problem – Lazo, Capital Madrid, Capital Buildings Allowance for Doubtful Accounts Allowance for Valuation of Investments 19,000 19.000 Lazo, Capital Madrid, Capital Nuguid, Capital (P200,000 – P19,000 + P19,000 – P20,000) 1/3 = P60,000 (P150,000 – P19,000 + P19,000 – P14,000) 1/3 = P45,333 60,000 45,333 Capital balances before admission of Nuguid Revaluation of assets Capital balances after revaluation Fraction of interest transferred to Nuguid 8,000 20,000 10,000 Lazo P199,000 ( 19,000) P180,000 x 1/3 Madrid P155,000 ( 19,000) P136,000 x 1/3 105,333 Total P354,000 ( 39,000) P316,000 x 1/3 AA - Chapter (2008 edition) page 11 Interest transferred to Nuguid Gain on transfer Cash distribution to partners P 60,000 31,138 P 91,138 P 45,333 23,529 P 68,862 Capital balances before admission of Nuguid Revaluation of assets Interest transferred to Nuguid Balances Share in net profit Drawings Capital balances, December 31, 2008 Lazo P199,000 ( 19,000) ( 60,000) P120,000 18,000 ( 15,000) P123,000 Madrid P155,000 ( 19,000) ( 45,333) P 90,667 18,000 ( 12,000) P 96,667 Cash Accounts Receivable Investments Accounts Payable Osorio, Capital Nuguid 105,333 P105,333 18,000 ( 28,000) P 95,333 66,000 40,000 20,000 41,000 85,000 Lazo, Capital Madrid, Capital Nuguid, Capital Osorio, Capital P15,000 P105,333 54,667 P160,000 5,000 5,000 5,000 15,000 P315,000 + P85,000 = P400,000 x 1/4 P100,000 – P85,000 = Problem - Montero, Capital Concio, Capital (P8,000 x 3/5) Domino, Capital (P8,000 x 2/5) Cash 100,000 4,800 3,200 Montero, Capital Concio, Capital (P10,000 x 3/5) Domino, Capital (P10,000 x 2/5) Cash 100,000 Montero, Capital Concio, Capital (P60,000 x 3/6) Domino, Capital (P60,000 x 2/6) Cash Other Assets (P10,000 ÷ 1/6) 100,000 30,000 20,000 Montero, Capital (P6,000 x 1/6) Concio, Capital (P6,000 x 3/6) Domino, Capital (P6,000 x 2/6) Equipment [(P60,000 x 40%) – P18,000] Montero, Capital Equipment Cash (P100,000 – P1,000) 108,000 6,000 4,000 90,000 90,000 60,000 1,000 3,000 2,000 6,000 99,000 18,000 81,000 AA - Chapter (2008 edition) page 12 Problem 2-8 Damaso P120,000 ( 9,600) ( 24,000) P 86,400 Capital, January 1, 2008 Share in net loss Drawings Capital balances, December 31, 2008 a Dangwa P 70,000 ( 6,400) ( 24,000) P 39,600 Dangwa, Capital Dmaso, Capital Datu, Capital Cash Inventory P39,600 – P30,000 = P9,600 / 20% = P48,000 Datu P 80,000 ( 16,000) ( 24,000) P 40,000 39,600 14,400 24,000 30,000 48,000 Other Assets Dangwa, Capital Cash Damaso, Capital Datu, Capital P48,000 – P39,600 = P8,400/ 20% = P42,000 Dangwa, Capital Damaso, Capital Datu, Capital Cash 42,000 39,600 48,000 12,600 21,000 39,600 3,150 5,250 48,000 Problem - Cash Luna, Capital Matias, Capital Noble, Capital Guzman, Capital Old New 126,000 AC P294,000 126,000 P420,000 CC P300,000 120,000 P420,000 Bonus P( 6,000) 6,000 Cash Luna, Capital Matias, Capital Noble, Capital Other Assets Guzman, Capital Old New 120,000 2,000 2,000 2,000 Matias, Capital 60,000 20,000 20,000 20,000 60,000 60,000 AC P240,000 60,000 P300,000 CC P300,000 60,000 P360,000 Asset Rev (P60,000) (P60,000) 36,000 AA - Chapter (2008 edition) page 13 Guzman, Capital P120,000 x 30% = P36,000 36,000 Luna, Capital Matias, Capital Noble, Capital Cash 80,000 8,000 8,000 Luna, Capital David, Capital 80,000 Luna, Capital Matias, Capital Noble, Capital 80,000 96,000 80,000 40,000 40,000 Problem -10 Canda, Pardo and Andres Statement of Changes in Partners’ Equity For the Period January 1, 2006 to January 1, 2009 Original capital, January 1, 2006 Corrected 2006 net profit Drawings Capital, January 1, 2007 Corrected 2007 net profit Drawings Capital, January 1, 2008 Corrected 2008 net loss Drawings Capital, January 1, 2009 Canda P 62,500 26,375 (15,000) P 73,875 10,875 (15,000) P 69,750 ( 6,750) (10,000) P 53,000 Pardo P 25,000 10,550 ( 7,800) P 27,750 4,350 ( 7,800) P 24,300 ( 2,700) ( 5,200) P 16,400 Andres P 12,500 5,275 ( 5,200) P 12,575 2,175 ( 5,200) P 9,550 ( 1,350) ( 5,200) P 3,000 Total P 100,000 42,200 ( 28,000) P 114,200 17,400 ( 28,000) P 103,600 ( 10,800) ( 20,400) P 72,400 Schedule of computation of corrected net profit Reported net profit (loss) Understatement of accrued expenses Understatement of accrued revenues Overstatement of inventories Understatement of depreciation exp Corrected net profit (loss) 2006 2007 2008 2006 2007 2008 2006 2007 2008 2006 P 44,000 ( 400 ) 2007 P 18,500 400 ( 500 ) 2008 P (10,500 ) ( 250 ( 1,500 ) ( 150 ) P 42,200 ( 250 ) 100 1,500 ( 2,000 ) ( 350 ) P 17,400 ( 500 650 ) 100 ) 150 2,000 ( 2,000 ) ( 200 ) P (10,800 ) AA - Chapter (2008 edition) a b page 14 Revenue Receivable Canda, Capital Pardo, Capital Andres, Capital Expenses Payable Merchandise Inventory Accumulated Depreciation 150 2,000 800 400 Canda, Capital (P3,000 x 625/1000) Pardo, Capital (P3,000 x 250/1000) Andres, Capital (P3,000 x 125/1000) Furniture (P4,500 - P1,500) 1,875 750 375 650 2,000 700 3,000 c Andres, Capital Furniture Cash Problem -11 2,625 1,500 1,125 Abelar and Berces Statement of Changes in Partners’ Equity For the Period January 1, 2007 to January 15, 2009 Capital balances before closing the books, December 31, 2007 Net profit for 2007 (Sch 1) Drawing Capital, December 31, 2007 Admission of Custodio (Sch 2) Net loss for 2008 Drawings Capital, December 31, 2008 Loss on realization on Jan 15, 2009 Final cash distribution Abelar Berces Custodio Total P 50,000 6,600 (8,200) P 48,400 (7,800) (5,250) (7,500) P 27,850 (16,520) P 11,330 P 30,000 7,400 (6,800) P 30,600 (5,200) (3,750) (5,000) P 16,650 (11,800)` P 4,850 P 33,000 (6,000) (6,800) P 20,200 (18,880) P 1,320 P 80,000 14,000 (15,000) P 79,000 20,000 (15,000) (19,300) P 64,700 (47,200) P 17,500 Abelar_ P 9,000 (2,400) P 6,600 Berces P 9,000 (1,600) P 7,400 Total P 18,000 ( 4,000) P 14,000 Schedule - Distribution of 2007 net profit Salaries Balance - 60%, 40% Total Schedule - Admission of Custodio Total capital contribution (P79,000 + P20,000) Interest to be credited to Custodio Capital credit of Custodio Capital contribution of Custodio Bonus to Custodio from Abelar and Berces P 99,000 1/3 P 33,000 20,000 P 13,000 AA - Chapter (2008 edition) page 15 MULTIPLE CHOICE B A B A Lima Mitra A Asset revaluationP60,000/20% = P300,000 - P150,000 Lima = [P100,000 + (P150,000 x 75%)] x 80% Mitra = [P 50,000 + (P150,000 x 25%)] x 80% Nova D P264,000 – [(P278,000 + P418,000 + P192,000) x 1/5] = P86,400 = = P100,000 x 80% = P80,000 P 50,000 x 80% = P40,000 Original investment Net profit Drawings Capital bal before transfer to Desta Required capital based on orig capital ratio after transfer to Desta of 1/4 int Capital to be transferred to Desta Excess cash to be dist based on orig capital ratio (P30,000 - P18,810) Distribution of cash to Felix and Elias 10 D C C A 11 C D A 14 C Elias P 48,000 10,860 ( 8,000) P 50,860 Total P 72,000 16,290 ( 13,050) P 75,240 18,810 5,570 37,620 P 13,240 56,430 P 18,810 3,730 P 9,300 7,460 P 20,700 11,190 P 30,000 P P90,000 – P75,000 = P15,000 Capital of Mison prior to admission of Zamora Share in the bonus from Zamora [(P90,000 – P75,000) 1/2) Capital of Mison in the new partnership Voltaire Asuncion Leonor 12 13 Felix P 24,000 5,430 ( 5,050) P 24,380 P150,000 P170,000 P 70,000 P 60,000 AC P180,000 210,000 195,000 P585,000 CC P150,000 180,000 195,000 P525,000 P195,000 – (P525,000 x 1/3 = P175,000) = P20,000 Old partners’ capital contribution Percentage of interest of old partners Total agreed capital of the new partnership Percentage of interest of Sison Capital credit of Sison Bonus to Sison Cash to be contributed by Sison Capital balances before adm of Vidal Asset revaluation Rivera P504,000 P105,000 7,500 P112,500 Asset Rev P30,000 30,000 P60,000 P600,000 ÷ 75% P800,000 x 25% P200,000 70,000 P130,000 Sanchez P252,000 Torres P 84,000 AA - Chapter (2008 edition) page 16 (P180,000/20% ) – P840,000 = P60,000 Adjusted capital balances Percentage of unsold interest Capital balances after adm of Vidal 36,000 P540,000 x 80% P432,000 18,000 P270,000 x 80% P216,000 6,000 P 90,000 x 80% P 72,000 15 D Total capital of the new partnership (P840,000/75%) Percentage of interest Amount to be invested by Vidal in the partnership 16 B P330,000 315,000 P 15,000 17 A Agreed capital Capital contribution = P95,000 + P80,000 + P60,000 + P80,000 = Asset revaluation P80,000 + P12,000 – P70,000 = P22,000 18 C Capital balance before admission of Manalo Interest sold to Manalo (P80,000 x 15%) Share in the recorded asset revaluation (P15,000 x 3/10) Share in the bonus from Manalo [(P80,000 + P12,000) - P70,000] x 3/10 Capital balance after admission of Manalo P 80,000 (12,000) 4,500 19 B 20 A 21 A Capital balances, April 30, 2008 1/6 Interest transferred to Magno Balances Cash transfers to equalize investment Balances Distribution of net profit -equally Withdrawals Capital, June 30, 2008 6,600 P 79,100 Juan P 360,000 ( 60,000) P 300,000 ( 100,000) Cosme P 225,000 ( 37,500) P 187,500 12,500 Luna P 135,000 ( 22,500) P 112,500 87,500 P 200,000 3,150 ( 1,500) P 201,650 P 200,000 3,150 ( 2,000) P 201,150 P 200,000 3,150 ( 1,500) P 201,650 Agreed capital = (P201,650 + P201,150 + P201,650) ÷ 3/4 = Interest of Magno Required capital credit of Magno Capital balance of Magno before investing cash Cash to be invested by Magno Asset revaluation method: Capital contributions of partners Asset revaluation Additional depreciation Capital balances Bonus method: Capital contributions of partners Bonus to old partners from new partner Capital balances Net advantage of bonus method to Isleta 22 P1,120,000 x 25% P 280,000 A Capital balance Magno P 120,000 P 120,000 P 120,000 3,150 ( 2,000) P121,150 P805,933 1/4 _ P201,483 121,150 P 80,333 Galang Hizon Isleta P600,000 252,000 ( 140,000) P712,000 P480,000 168,000 ( 140,000) P508,000 P500,000 P600,000 63,000 P663,000 P480,000 42,000 P522,000 P500,000 ( 105,000) P395,000 P 35,000 Campos P641,976 Centeno P728,352 ( 140,000) P360,000 AA - Chapter (2008 edition) Uncollectible accounts Worthless inventories Other assets written off Adjusted capital page 17 ( 20,000) ( 5,500) ( 2,000) P614,476 ( 35,000) ( 6,700) ( 3,600) P683,052 23 C Total capital P614,476 +P683,052 Total liabilities 24 D Total capital P1,297,528 / 80% Interest of Coronel Contribution of Coronel P1,621,910 x 20% P 324,382 25 D Capital balances Required capital P1,297,528/2 Cash paid (received) Campos P614,476 648,764 P 34,288 Centeno P683,052 648,764 (P34,288) Campos P614,476 34,288 130,000 (50,000) P728,764 Centeno P683,052 (34,288) 130,000 (65,000) P713,764 26 B Capital balances Cash paid (received) Net profit Drawings 27 28 29 30 31 32 C C D D D A 33 C 65,000 (28,000) P361,382 P4,000 x 2/5 = P1,600 P3,000 / 40% = P7,500 P12,000/3 = P4,000 Retirement of Yumul Capital balance of Ylagan A Coronel P324,382 The capital balances would be the same as the balances prior to sale of interest Interest before retirement Adjustment of assets to FMV 34 P1,297,528 967,590 P2,265,118 Amount paid to retiring partner Capital of retiring partner Total capital before retirement Total capital after retirement Asset revaluation to retiring partner Fraction of interest of retiring partner Total asset revaluation Yumul P103,000 12,000 P115,000 (115,000) Yason P 77,000 12,000 P 89,000 ( 2,000) Ylagan P180,000 24,000 P204,000 ( 4,000) P200,000 P28,000 P110,000 90,000 20,000 P 8,000 ÷ 2/10 P40,000 AA - Chapter (2008 edition) page 18 ... 60,000 40,000 300,000 200,000 600,000 300,000 200,000 300,000 AA - Chapter (2008 edition) page The bonus method will be preferred by Manzano Capital of Manzano after retirement Additional depreciation... Bonus_ P(15,000) 15,000 P -0 - Revaluation of Assets Method (AC = P180,000 ÷ 1/4 = P720,000) AA - Chapter (2008 edition) page Alba, Capital (P60,000 x 40%) Medel, Capital (P60,000 x 60%) Other Assets... before admission of Estacio Contribution of Estacio Estacio P500,000 Total P1,800,000 500,000 AA - Chapter (2008 edition) page Adjustment of fixed assets to fair value Capital after admission of