Chapter 4- Partnership Dissolution PDF

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Partnership DissolutionNew 88,750 115,000 (26,250)1. Catral, Capital 160,Conti, Capital 160,P480,000 x 1/3 = P160,2. Clemente, Capital 120,Conti, Capital 120,P360,000 x 1/3 = P120,3. Catral, Capital P336,000 x ¾ 252,Clemente, Capital P336,000 x ¼ 84,Other Assets 336,P126,000 1/4 = P504,000 – P840,0...

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CHAPTER 4 Partnership Dissolution EXERCISES Exercise 4-1 1. Camus, Capital (90,000 x 1/3) Cuenco, Capital (60,000 x 1/3) Cerda, Capital 2.

3.

4.

5.

30,000 20,000 50,000

Other Assets Camus, Capital (P120,000 x 75%) Cuenco, Capital (P120,000 x 25%)

120,000 90,000 30,000

Camus, Capital [(P90,000 + P90,000) x 1/3] Cuenco, Capital [(P60,000 + P30,000) x 1/3] Cerda, Capital

60,000 30,000

Cash Cerda, Capital Camus, Capital (P30,000 x 60%) Cuenco, Capital (P30,000 x 40%)

90,000

Cash Other Assets Camus, Capital (P120,000 x 60%) Cuenco, Capital (P120,000 x 40%) Cerda, Capital AC Old P270,000 New 90,000 P360,000

90,000 60,000 18,000 12,000 90,000 120,000 72,000 48,000 90,000 CC P150,000 90,000 P240,000

Asset Rev P120,000 -----P120,000

Cash Camus, Capital (P30,000 x 60%) Cuenco, Capital (P30,000 x 40%) Cerda, Capital

90,000 18,000 12,000 120,000

Exercise 4-2 1. Cular, Capital Canda, Capital

20,000

2.

Other Assets Capco, Capital Cular, Capital Cruz, Capital P70,000  ¼ = P280,000 – (P100,000 + P80,000 + P60,000) = P40,000

40,000

Capco, Capital (P100,000 + P20,000) x ¼ Cular, Capatil (P80,000 + P12,000) x ¼ Cruz, Capital (P60,000 + P8,000) x ¼ Canda, Capital

30,000 23,000 17,000

3.

Cash Canda, Capital Capco, Capital P26,250 x 50%

20,000 20,000 12,000 8,000

70,000 115,000 88,750.00 13,125

Cular, Capatil P26,250 x 30% Cruz, Capital P26,250 x 20% Old New

AC P266,250 88,750 P355,000

7,875 5,250 CC P240,000 115,000 P355,000

Bonus P26,250 (26,250) P ------

Exercise 4-3 1. Catral, Capital Conti, Capital P480,000 x 1/3 = P160,000 2.

3.

160,000 160,000

Clemente, Capital Conti, Capital P360,000 x 1/3 = P120,000

120,000

Catral, Capital P336,000 x ¾ Clemente, Capital P336,000 x ¼ Other Assets P126,000 1/4 = P504,000 – P840,000 = P336,000

252,000 84,000

120,000

336,000

Catral, Capital Clemente, Capital Conti, Capital (P480,000 – P252,000) x 1/4 = P57,000 (P360,000 - P84,000 ) x 1/4 = P69,000

57,000 69,000 126,000

Exercise 4-4 1a. Carlos, Capital (P200,000 x ¼) Cruz, Capital (P300,000 x 1/3) Caparas, Capital

50,000 100,000

1b.

120,000

150,000

Cash Carpio, Capital

2.

Carlos (P200,000 – 50,000 = P150,000) Cruz (P300,000 – 100,000 = P200,000) Caparas Carpio

Exercise 4-5 1. Bonus Method Cash Cuenca, Capital (P25,000 / 2) Claudio, Capital (P25,000 / 2) Cabral, Capital AC Old P525,000 New 175,000 P700,000

2.

Asset Revaluation Method Cash Other Assets Cuenca, Capital (P100,000 / 2) Claudio, Capital Cabral, Capital

120,000 150,000 200,000 150,000 120,000

200,000 12,500 12,500 175,000 CC P500,000 200\,000 P700,000

Bonus P25,000 (P25,000) -----

200,000 100,000 50,000 50,000 200,000

Old New

AC P600,000 200,000 P800,000

CC P500,000 200,000 P700,000

Asset Rev. P100,000 -----P100,000

Exercise 4-6 1. Cash Choy, Capital (P21,000 x 3/7) Chua, Capital (P21,000 x 2/7) Cheng, Capital (P21,000 x 2/7) Chiu, Capital Old New

2.

AC P396,000 99,000 P495,000

120,000 9,000 6,000 6,000 99,000 CC P375,000 120,000 P495,000

Bonus P21,000 (21,000) -------

Other Assets Choy, Capital (P105,000 x 3/9) Chua, Capital Cheng, Capital

105,000

Cash Chiu, Capital

120,000

Old New

45,000 30,000 30,000 120,000

AC P480,000 120,000 P600,000

CC P375,000 120,000 P495,000

Asset Rev P105,000 P105,000

Problem 4-1 1. Carmen, Capital Centeno, Capital Corrales, Capital 2.

40,000 20,000 60,000

Other Assets Carmen, Capital Centeno, Capital P120,000  1/3 = P360,000 – P240,000 = P120,000

120,000 72,000 48,000

Carmen, Capital ([P160,000 + P72,000] x 1/3) Centeno, Capital [(P80,000 + P48,000) x 1/3] Corrales, Capital 3.

120,000

Other Assets Cash Carmen, Capital Centeno, Capital Corrales, Capital Old New

4.

77,333 42,667 120,000 120,000 72,000 48,000 120,000

AC P360,000 120,000 P480,000

Cash Carmen, Capital (P60,000 x 60%) Centeno, Capital (P60,000 x 40%) Corrales, Capital

CC P240,000 120,000 P360,000

Asset Rev P 120,000 ----P 120,000 120,000 36,000 24,000 180,000

Old New

5.

6.

7.

10.

Cash Corrales, Capital Carmen, Capital Centeno, Capital

160,000

Cash Corrales, Capital Carmen, Capital Centeno, Capital

100,000

120,000 24,000 16,000 140,000 12,000 8,000 85,000 9,000 6,000 AC P255,000 85,000 P340,000

CC P240,000 100,000 P340,000

Bonus P15,000 (15,000) --------

Cash Other Assets Corrales, Capital Carmen, Capital Centeno, Capital

110,000 90,000 110,000 54,000 36,000 AC P330,000 110,000 P440,000

CC P240,000 110,000 P350,000

Asset Rev P90,000 -------P90,000

Cash Carmen, Capital (P16,000 x 60%) Centeno, Capital (P16,000 x 40%) Corrales, Capital

96,000 9,600 6,400

Cash Corrales, Capital P240,000  4/5 = P300,000 x 1/5 = P60,000

60,000

112,000

Problem 4-2 1. Cash Calma, Capital Old New

2.

Bonus P(60,000) 60,000 -------160,000

Old New

9.

CC P240,000 120,000 P360,000

Cash Corrales, Capital Carmen, Capital Centeno, Capital

Old New

8.

AC P180,000 180,000 P360,000

Cash Calma, Capital Coral, Capital Corpuz, Capital

60,000

150,000 150,000 AC P300,000 150,000 P450,000

CC P300,000 150,000 P450,000 120,000 105,000 12000 3000

Old (3/4) New (1/4)

3.

AC P315,000 105,000 P420,000

CC P300,000 120,000 P420,000

Bonus P15,000 (15,000) ------

Cash Coral, Capital Corpuz, Capital Calma, Capital Old New

4.

5.

6.

60,000 24,000 6,000 90,000 AC P270,000 90,000 P360,000

CC P300,000 60,000 P360,000

Bonus (P30,000) 30,000 -

Coral, Capital (P180,000 x ¼) Corpuz, Capital (P120,000 x ¼) Calma, Capital

45,000 30,000

Other Assets Coral, Capital Corpuz, Capital

30,000

Coral, Capital [(P180,000 + P24,000) ¼] Corpuz, Capital [(P120,000 + P6,000) ¼] Calma, Capital

51,000 31,500

Cash Other Assets Calma, Capital Coral, Capital Corpuz, Capital

90,000 60,000

Old New

75,000 24,000 6,000

82,500

90,000 48,000 12,000 AC P360,000 90,000 P450,000

CC P300,000 90,000 P390,000

Asset Rev. P 60,000 -----P 60,000

Problem 4-3 1. a. Cash Coloma, Capital b.

c.

Cash Castillo, Capital (P25,000 x 70%) Cordova, Capital (P25,000 x 30%) Coloma, Capital AC Old P1,425,000 New 475,000 P1,900,000 Cash Other Assets Castillo, Capital (P700,000 x 70%) Cordova, Capital (P700,000 x 30%) Coloma, Capital AC Old P2,100,000 New 700,000

350,000 350,000 500,000 17,500 7,500 475,000 CC P1,400,000 500,000 P1,900,000

Bonus P25,000 ( 25,000) ----------700,000 700,000 490,000 210,000 700,000

CC P1,400,000 700,000

Asset Rev P700,000 -----------

P2,800,000 d.

e.

P2,100,000

P700,000

Castillo, Capital Cordova, Capital Coloma, Capital

140,000 210,000

Castillo, Capital Cordova, Capital Coloma, Capital

112,000 168,000

350,000

280,000

Problem 4-4 1. Total capital of old partners Fraction of interest of old partners Total partnership capital after admission of Cruz Interest of Cruz Required contribution of Cruz 2 a.

Bonus method AC P435,000 250,000 35,000 180,000 P900,000

Cortes Canda Cena Cruz

2b.

P690,000  4/5 P862,500 x 1/5 P172,500

CC P420,000 240,000 30,000 210,000 P900,000

Bonus P15,000 10,000 5,000 ( 30,000) -------

Asset Revaluation method Cortes Canda Cena Cruz

AC P495,000 290,000 55,000 210,000 P1,050,000

CC P420,000 240,000 30,000 210,000 P900,000

Asset Rev P75,000 50,000 25,000 P 150,000

Problem 4-5 1. a. Asset Revaluation method Cash Ciara, Capital Cora, Capital Celia, Capital Other Assets Carla, Capital AC P 630,000 90,000 P720,000

Old New

b.

90,000 18,000 18,000 9,000 45,000 90,000 CC P 675,000 90,000 P765,000

Asset Rev (P45,000) (P45,000)

Bonus method Cash Ciara, Capital Cora, Capital Celia, Capital Carla, Capital Old

90,000 2,250 2,250 1,125 95,625 AC P669,375

CC P675,000

Bonus (P5,625)

New

95,625 P765,000

90,000 P765,000

Capital balances – Bonus method Capital balances – Asset Revaluation method Reduction in depreciation due to asset revaluation Capital balances after reduction in depreciation Net advantage (disadvantage) of bonus over asset rev.

5,625 ----Ciara P321,750 P306,000 11,250 P 317,250 P 4,500

Cora P213,750 P198,000 11,250 P209,250 P4,500

Celia P134,875 P126,000 11,250 P137,250 (P 3,375)

Carla P95,625 P90,000 11,250 P101,250 (P5,625)

Celia will prefer the asset revaluation method over the bonus method because of the P3,375 advantage over the bonus method. 2.

a.

b.

Ciara, Capital Cora, Capital Celia, Capital Carla, Capital

40,500 27,000 16,875

Other Assets Ciara, Capital Cora, Capital Celia, Capital P90,000  1/8 = P720,000 – P675,000 = P45,000

45,000

Ciara, Capital (P324,000 + P18,500) x 1/8 Cora, Capital (P216,000 + P18,000) x 1/8 Celia, Capital (P135,000 + P9,000) x 1/8 Carla, Capital

42,750 29,250 18,000

Problem 4-6 1. Capital balances before the admission of Camo Purchase of 1/6 interest of Cadiz Contribution to the partnership Asset revaluation to old partners Bonus to old partners Capital balances after the admission of Camo 2.

Cabal Cadiz

= 20% x 80% = 16% = 30% x 80% = 24%

84,375 18,000 18,000 9,000

90,000

Cabal P150,000 4,000 4,000 P158,000

Cadiz P180,000 (30,000)

Caldea P300,000

6,000 6,000 P162,000

10,000 10,000 P320,000

Camo 30,000 150,000 (20,000) P160,000

Caldea = 50% x 80% = 40% Camo = 20%

Problem 4-7 Capital balances Dec. 31, 2013 before closing Distribution of 2013 profit: Salaries Balance Share in 2013 profit Total Drawing Capital balances, January 1,2014 Investment of Calixto Bonus to Calixto Capital balances after the admission of Calixto

Corona P250,000

Calderon P150,000

P45,000 (12,000) P33,000 P283,000 (41,000) P242,000

P45,000 (8,000) P37,000 P187,000 (34,000) P153,000

(39,000) P203,000

(26,000) P127,000

Calixto

P100,000 65,000 P165,000

Total P400,000 P90,000 (20,000) P70,000 P470,000 (75,000) P395,000 100,000 P495,000

Total P630,000 ----150,000 20,000 -----P800,000

Share in 2014 loss Drawing Capital balances, January 1, 2015 Loss on sale of the partnership business Cash Settlement to partners

(26,250) (37,500) P139,250 (82,600) P56,650

(18,750) (25,000) P83,250 (59,000) P24,250

(30,000) (34,000) P101,000 (94,400) P6,600

(75,000) (96,500) P323,500 (236,000) P87,500

MULTIPLE CHOICE 1. 2. 3. 4.

C C A B

5.

B Capital bal. before admission of Chat Asset Revaluation Balances Interest sold to Chat (25%) Balances after the admission of Chat

6.

B

7.

B

8.

A

Chan P250,000 30,000 P280,000 ( 70,000) P210,000

Ching P150,000 18,000 P168,000 ( 42,000) P126,000

Chen P100,000 12,000 P112,000 ( 28,000) P 84,000

Total partnership capital before the admission of Co Fraction of interest of old partners Total partnership capital after the admission of Co Fraction of interest of Co Required contribution of Co

Total P500,000 60,000 P560,000 ( 140,000) P420,000

P280,000  5/6 P336,000 x 1/6 P 56,000 Cordova P641,976 ( 20,000) ( 5,500) ( 2,000) P614,476

Capital balances before adjustment Uncollectible accounts Worthless inventories Other assets written off Adjusted capital

Constancio P728,352 ( 35,000) ( 6,700) ( 3,600) P683,052

9.

B

Total capital (P614,476 + P683,052) Total liabilities (P178,940 + P200,000 + P243,650 + P345,000) Total assets

P1,297,528 967,590 P2,265,118

10.

A

Total capital (P1,297,528 / 80%) Interest acquired by Cuyugan Cash to be contributed by Cuyugan

P1,621,910 x 20% P 324,382

11.

D

Cordova P614,476 648,764 P 34,288

Capital balances Required capital (P1,297,528 / 2) Cash paid (received) 12.

13.

B

C

Capital balances Cash paid (received) Net income Drawings Capital balances, end of first year

Cordova P614,476 34,288 130,000 ( 50,000) P728,764

Conrado = ½ x 2/3

2/6

Constancio P683,052 ( 34,288) 130,000 ( 65,000) P713,764

Constancio P683,052 648,764 (P 34,288) Cuyugan P324,382 65,000 ( 28,000) P361,382

Cosio = 1/4 x 2/3 Cosme = 1/4 x 2/3 14.

B

15.

B

1/6 1/6

Agreed capital Contributed capital (P500,000+P200,000) Asset Revaluation Capital bal. before the admission of Cueto Transfer of 1/3 interest Investment of Cueto Asset Revaluation Capital bal. after the admission of Cueto

Test Material No. 14 1. T 6. F 2. F 7. T 3. T 8. F 4. T 9. F 5. F 10. T

11. 12. 13. 14. 15. 16. 17. 18.

F F F T T T T F

19. T 20. F

P 750,000 700,000 P 50,000

Conrado

Cosio

Cosme

P250,000

P150,000 ( 50,000)

P100,000

25,000

12,500

12,500

P275,000

P112,500

P112,500

TEST MATERIALS Test Material No. 15 1. Positive Asset Revaluation 2. Agreed capital 3. Bonus 4. Total contributed capital 5. Dissolution 6. Interest 7. Dissolution 8. Admission by purchase/Sale interest 9. Agreed capital 10 Admission by purchase

11. 12. 13. 14. 15. 16. 17. of 18. 19. 20.

Cueto

Total

P 50,000 200,000

P500,000 -----200,000 50,000

P250,000

P750,000

Admission by investment Bonus to old partners Liquidation Capital credit When AC is not given Old partners’ capital Fraction of interest Negative Asset Revaluation Personal gain or loss Net advantage

Test Material No. 16 1. B 2. C 3. A 4. B 5. B 6. D 7. A 8. B P190,000 x 2 = P380,000 + P160,000 = P540,000 x 1/5 = P108,000 9. C 10. D P180,000 + (P20,000 x 2/5) = P188,000 AC CC Old partners P420,000 P400,000 New partner 140,000 160,000 P560,000 P560,000 11. A P480,000 X 1/6 = P80,000 12. C (P100,000 + P200,000)  2/3 = P450,000 x 1/3 = P150,000 13. B Cariaso Carino

Bonus P20,000 (20,000) ------

Carillo

14. 15. 16.

A B C

Capital balances before admission of Cardel P400,000 P200,000 P100,000 Asset Revaluation 60,000 30,000 10,000 (P200,000  1/4) - P700,000 = P100,000 Capital balances after asset revaluation P460,000 P230,000 P110,000 Fraction of remaining interest ¾ ¾ ¾ Capital balances after admission of Cardel P345,000 P172,500 P82,500 P400,000 x 3/4 = P300,000; P200,000 x 3/4 = P150,000; P100,000 x 3/4 = P75,000

Cariaso Carino Carillo Cardel 17.

B Capital bal. bef. adm Transfer of 15% int. Investment of Cordero Asset Revaluation Bonus to old partners Capital bal. after the admission of Cordero

18. 19. 20.

A B C

Coral 40% x 80% = Camua 40% x 80% = Cerda 20% x 80% = Cordero

Coral P190,000

AC P385,000 192,500 97,500 225,000 P900,000 Camus P160,000 ( 24,000)

15,000 22,000

9,000 13,200

P227,000

P158,200

CC Bonus P400,000 (P15,000) 200,000 (7,500) 100,000 (2,500) 200,000 25,000 P900,000 Cerda Cordero Total P120,000 P470,000 P 24,000 -----160,000 160,000 6,000 30,000 8,800 (44,000) -----P134,800

P140,000

32% 32% 16% 20%

Test Material No. 17 Problem A 1.

2.

3.

4.

Asset revaluation to old partners - P100,000; no bonus AC Old P600,000 New 150,000 P750,000

CC P500,000 150,000 P650,000

Asset Rev P100,000 ------P100,000

No asset revaluation; bonus to old partners - P20,000 AC Old P520,000 New 130,000 P650,000

CC P500,000 150,000 P650,000

Bonus P 20,000 ( 20,000) -------

No asset revaluation;, bonus to new partner - P45,000 AC Old P455,000 New 195,000 P650,000

CC P 500,000 150,000 P650,000

Bonus (P45,000) 45,000 ------

Asset revaluation to old partners - P100,000; bonus to old partners - P37,500 AC CC Asset Rev Old P637,500 P500,000 P100,000 New 112,500 150,000 ------P750,000 P650,000 P100,000

Bonus P 37,500 ( 37,500) -------

P660,000

5.

No asset revaluation; bonus to old partners - P20,000. AC Old P520,000 New 130,000 P650,000

CC P500,000 150,000 P650,000

Bonus P 20,000 ( 20,000) --------

Problem B

P750,000 x 20% P150,000

Total capital of the partnership [(P148,000 + P260,000 + P192,000)  80%] Interest of Cinco Contribution of Cinco Problem C Capital balances before the admission of Canete Asset revaluation [(P120,000  1/4) - P420,000] Capital balances after asset revaluation Remaining interest Capital balances after the admission of Canete

Carandang P240,000 36,000 P276,000 x 3/4 P207,000

Cojuangco P120,000 18,000 P138,000 x 3/4 P103,500

Capistrano P60,000 6,000 P66,000 x 3/4 P49,500...