PROBLEM SOLVING:

a 1 On December 31, 2017, the Statement of Financial Position of CAR Partnership shows the following data with
profits or loss sharing ratio of 1:3:6

Cash P 5,000,000 Carla P

Non cash assets 15,000,000 Ara
Ren
Total liabilities P 10,000,000

On January 1, 2018, Ellen is admitted to the new partnership to be named CARE by purchasing 20% capital
interest of Carla in the amount of P 1,200,000. Which of the following statements is correct?

a. Ellen will have capital credit of P 200,000 after the dissolution

b. The old partnership will recognize gain of P 200,000 resulting from Ellen's admission
c. The new partnership will have a total capital of P 10,200,000
d. Carla will have P 4,000,000 capital balance after the admission of Ellen

Computation:
5,000,000 x 20% = 1,000,000
5,000,000 - 1,000,000 = 4,000,000

a 2. SG, AP and TS are partners with capital balances of P 784,000, P 2,730,000 and P 1,190,000, respectively,
sharing profits and losses in the ratio of 3:2:1. DJ is admitted as a new partner bringing with him expertise
and is to invest cash for a 25% interest in the partnership which includes a credit of P 735,000 for bonus
upon his admission. How much cash should DJ contribute?
a P 1,323,000 b. P 2,100,000 c P 1,575,000

Computation: 50% 33% 17% 25%

TOTAL SG AP TS DJ
Capital balances 4,704,000 784,000 2,730,000 1,190,000 588,000
Bonus 735,000 367,500 245,000 122,500 735,000
AC 3,969,000 416,500 2,485,000 1,067,500 (147,000)

Credit 735,000 x 20% 147,000

Less (147,000)
DJ, Contrib 588,000

b 3. On December 2020, the Statement of Financial Position of DEL Partnership shows the following data with
profit or loss sharing ratio of 1:3:6

Cash P 5,000,000 Diane P

Non cash assets 15,000,000 Ellen
Liz
Total liabilities P 10,000,000
 On January 1, 2021, Ana will be admitted to the new partnership to be named ADEL Partnership by investing
P 4,000,000 for 30% capital interest in the new partnership which has a total agreed capitalization of
P 20,000,000. What is the new capital balance of Liz upon admission of Ana in ADEL Partnership?
a P 4,400,000 b. P 8,400,000 c P 5,600,000
Computation:
CC Bonus AC
Dianne 5,000,000 400,000 5,400,000
Ellen 3,000,000 1,200,000 4,200,000
Liz 2,000,000 2,400,000 4,400,000
Total ### 4,000,000 ###

Ana ### ### ###

### 0 ###

d 4. On December 31, 2016, the Statement of Financial Position of OVE Partnership shows the following data
with profit or loss sharing of 5:3:2

Cash P 10,000,000 Ona P

Non cash assets 40,000,000 Vina
Ena
Total liabilities P 20,000,000

On January 1, 2017, Lina is admitted to the new partnership to be named LOVE by investing P 20,000,000
for 50% capital interest in the new partnership.
What is the new capital balance of Ena after Lina's admission in LOVE Partnership?
a P 6,000,000 b. P 5,000,000 c P 4,000,000
Computation:
CC Bonus AC
Ona ### ### ###
Vina ### 6,000,000 ###
Ena 5,000,000 4,000,000 9,000,000
Total ### ### ###

Lina ### ### ###

### 0 ###

c 5. On December 21, 2020, the unadjusted Statement of Financial Position of UFC Partnership shows the
following data with profit or loss sharing agreement of 2:3:5

Total assets P 100,000,000 \umber P

Fritz
Total liabilities P 40,000,000 Carol

On December 31, 2020, Umber decided to retire from the partnership. However, before the distribution
 of cash to Umber, the following data errors were discovered during the pre-retirement audit:

a. During 2020, the property, plant and equipment has to be subject to revaluation surplus of P 15,000,00
b. The 2020 net income is overstated by P 5,000,000

After the adjustment, Umber received retirement pay of P 15,000,000 for his capital interest.
What is the capital balance of Fritz after the retirement of Umber?
a P 23,000,000 b. P 21,000,000 c P 18,875,000

Computation:
CC Income Interest CC
Umber ### ### 1,000,000 ###
Fritz ### ### 875,000 ###
Carol ### ### 1,875,000 ###
Total ### ### 3,750,000 ###
ows the following data with

5,000,000
3,000,000
2,000,000

y purchasing 20% capital

tements is correct?

en's admission

1,190,000, respectively,
nging with him expertise
of P 735,000 for bonus

d. P 588,000

the following data with

5,000,000
3,000,000
2,000,000
EL Partnership by investing
ed capitalization of
Ana in ADEL Partnership?
d. P 3,200,000

ows the following data

10,000,000
15,000,000
5,000,000

investing P 20,000,000

d. P 3,000,000

rtnership shows the

10,000,000
20,000,000
30,000,000

before the distribution

evaluation surplus of P 15,000,000

d. P 21,875,000