Advance ac manuel chap 3 PDF

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CHAPTER 3 EXERCISES 1.

Entry:

Cruz, Capital Vera, Capital

Revised Partner’s Equity 25,000 12,500 12,500 50,000

½ (12,500) 12,500 12,500 12,500

Original P&L Ratio 60% 40% ____ 100%

Transfer P&L Ratio

Pio Basa Cortez Diaz

Original Partner’s Equity 48,000 72,000 30,000 _______ 150,000

Transfer of Interest ½ (24,000) (36,000) (15,000) 75,000

Revised Partner’s Equity 24,000 36,000 15,000 75,000 150,000

Pio Basa Cortez Diaz

Original Partner’s Equity Transfer of Interest 48,000 (30,000)* 72,000 (45,000)* 30,000 _______ ½ of 150,000 75,000 150,000

Revised Partner’s Equity 18,000 27,000 30,000 75,000 150,000

Artuz Cruz Vera 2.

Transfer of Interest

Original Partner’s Equity 25,000 25,000 ______ 50,000

Artuz Cruz Vera

a)

b)

Revised P&L Ratio 60% 20% 20% 100%

½ (20%) 20%

* 48/120 x 75,000 72/120 x 75,000 c)

Revaluation

Original Partner’s Equity Pio Basa Cortez Diaz

4,800 8,000 3,200 _____ 16,000 OR Diaz is willing to pay P40,000 for ½ of Basa’s interest Basa’s interest – is implied to be - per book - share in undervaluation Divide by Total revaluation a)

48,000 72,000 30,000 _ _____ 150,000

Entries: Pio, Capital Basa, Capital Cortez, Capital Diaz, Capital

30% 50% 20%

c)

Assets Pio, Capital Basa, Capital Cortez, Capital

16,000

Pio, Capital Diaz, Capital

40,000

Original PE 40,000 50,000 30,000 120,000

Entry:

Carlos, Capital

_______ 166,000

40,000

80,000 72,000 8,000 50% 16,000

75,000 30,000 45,000

Bella Carlos Diaz

Transfer of Interest ½ ( 40,000)

24,000 36,000 15,000

b) Pio, Capital Basa, Capital Diaz, Capital

3.

PE after Revaluation 80,000

75,000 4,800 8,000 3,200 40,000 (40%) (35%) (25%)

At P&L Ratio 48,000 42,000 30,000 120,000 8,000

Diff. Represents cash settlement 8,000 8,000

PE Revised 52,800 40,000 33,200 40,000 166,000

10

Bella, Capital

4.

8,000

If only cash investment is involved, total agreed equity should be higher than 120,000. Trial and error: Bella, Capital 40,000 / 40% 100,000 reject since it is lower Carlos, Capital 50,000 / 35% 142,857 accept, higher by 2,857 Diaz, Capital 30,000 / 25% 120,000 reject, same as original PE The lowest possible investment is P20,000. Original PE 40,000 50,000 30,000 120,000

Bella Carlos Diaz 5.

Original Partner’s Equity 100,000 50,000 _______ 150,000

1) Anson Rustan Sy * 150,000x20% =

6.

a) Anson Rustan Sy b) Anson Rustan Sy

c) Anson Rustan Sy

20%

Transfer of Interest (20,000) (10,000) 30,000 0

M J D L b)

5,714.20 22,857.00 Revised Partner’s Equity 80,000 40,000 30,000 150,000

60,000 20% 300,000 150,000 150,000

Original PE

Asset Rev.

100,000 50,000 _______ 150,000

112,500 37,500

PE After GW 212,500 87,500 _______ 300,000

150,000

Total Investment 100,000 50,000 60,000 210,000

Bonus 13,500 4,500 (18,000) -

Total Investment

PE After Adm. (Agreed Equity)

100,000 50,000 60,000 210,000

Agreed Equity

PE After Admission 170,000 70,000 60,000 300,000

Asset Revaluation

167,500 72,500 60,000 (20%) 300,000

Investment 100,000 50,000 60,000 210,000

Transfer of Interest (20%) (42,500) (17,500) 60,000 0

PE After Adm. Agreed Equity 113,500 54,500 42,000 20% 210,000

67,500 22,500 ______ 90,000

Asset Writedown 16,875 x ¾ 5,625 x ¼

60,000 187,500 (150,000 / 80%) 22,50 0

7. a)

Additional 17,142.80

300,000x100/50 = 20,000 50/150 = 10,000

2) Offer of Mr Sy Divide by Value of Partner’s Equity Original Partner’s Eq uity Asset Revaluation

Anson Rustan Sy

Agreed 57,142.80 35,000.00 35,714.20 142,857.00

40% 35% 25%

Contributions 50,000 30,000 20,000 ? 0

Agreed 50,000 30,000 20,000 20% 25,000 *125,000

(125,000x20%) (100,000/80%)

Contributions

Agreed

Asset Rev.

Capital after Admission = 83,125 = 44,375 60,000 187,500

11

M J D L

50,000 30,000 20,000 50,000 150,000

50,000/20% * 200,000

= 50,000

Asset revaluation should be for original partners. Thus new partner’s investment = her capital credit 1) Cash 50,000 Luna, Capital 50,000 2) Asset Monzon, Capital Javier, Capital Dakila, Capital c) M J D L

Contributions 50,000 30,000 20,000 30,000 130,000

50,000 25,000 15,000 10,000 Agreed

Asset Rev.

30,000/25% 120,000

______ 10,000

Cash Luna, Capital

50,000

Monzon, Capital Javier, Capital Dakila, Capital Assets

5,000 3,000 3,000

d) M J D L

50,000

10,000

Contributions 50,000 30,000 20,000 32,000 125,000

Agreed

30,000 150,000

Cash Monzon, Capital Javier, Capital Dakila, Capital Luna, Capital

25,000 2,500 1,500 1,000

Assets M, Capital J, Capital D, Capital

25,000

Bonus (2,500) (1,500) (1,000) 5,000 0

Asset Rev. 12,500 7,500 5,000 ______ 25,000

30,000 12,500 7,500 5,000

8. a) Table 6/30 Luis Lani Fely Vilma Cathy

Cap. Bal. 50,000 30,000 40,000

NI 6/30 22,500 11,250 11,250

Agreed Eqty

40,000 160,000

_____ 45,000

40,000 200,000

Asset Rev. (2,500) (1,250) (1,250) 20%

Transfer of Int

______ (5,000)

(13,333) 13,333 _______ 0

b) Table 12/31 Luis Lani Fely Vilma Cathy 9.

a)

PE as of 6/30 70,000 26,667 50,000 13,333 40,000 200,000

40% 16% 16% 8% 20%

NI Drawings 22,000 (10,0000 8,800 (5,000) 8,800 4,400 11,000 ______ 55,000 (15,000)

Cont. of Ortiz and Ponce (482,000 – 9,000 – 10,000 – 8,000) Divide by P&L ratio Total partner’s contribution as adjusted x Chan’s P&L ratio Cash investment of Chan

PE 12/31 82,000 30,467 58,800 17,733 51,000 240,000 455,000 80% 568,750 20% 113,750 a)

PE 70,000 26,667 50,000 13,333 40,000 200,000

12

Agreed Equity: Ortiz (30% x 568,750) Ponce (50% x 568,750) b) Ortiz Ponce Chan c)

170,625 284,375 TCC 255,875 199,125 113,750 568,750

Bonus (85,250) 85,250 -

TAC 170,625 284,375 113,750 568,750

Ortiz 178,125 263,375 ( 85,250)

Ponce 296,875 211,625 85,250

Total 475,000

10. a) Share of Lane in Net Income (120,000 x 7/12 x 1/10) Lane, Capital Beg. Lane, Drawing Lane, Capital July 31 Income Summary Lane, Capital Lane, Drawing b)

7,000 5,000 2,000

Lane, Capital Clark, Capital Kane Clark

7,000 42,000 ( 2,000) 47,000

47,000 47,000 Revised PE a) 252,000 173,000 425,000

c) Lane, Capital Loan Payable to Lane Kane, Capital Clark, Capital Cash

47,000 10,000 3,111 3,889 50,000

Profit share is 240,000-7,000 share of Lane = 233,000 x 4/9 and 5/9 Revised PE Kane (252,000 + 3,111 + 103,556)= P358,667 Clark (126,000 + 3,889 + 129,444)= 259,333 Total P618,000 11. a) 50,000 – 47,000 = 3,000 revaluation share Total revaluation = 30,000 Entries 1. Assets Kane Clark Lane

30,000 12,000 15,000 3,000

2. Lane, Capital Cash 11. b) Income Summary Kane Clark

50,000 50,000 237,000 103,555 129,444

Partner’s Equity Kane (252,000,+12,000+103,556) Clarck (126,000+15,000+129,444) 12. 6/1 Assets Cely, Capital Madel, Capital Josh, Capital Income & Expense Summary Cely, Capital (120,000 x 5/12 x .2)

46,000 9,200 9,200 27,600 10,000 10,000...