Solution Manual/ Answer key. Chapter 13 Partnership Dissolution by Zeus Millan PDF

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Chapter 13Partnership DissolutionPROBLEM 1: TRUE OR FALSE1. FALSE2. FALSE3. TRUE4. FALSE5. FALSEPROBLEM 2: FOR CLASSROOM DISCUSSION Solution: Date A, Capital C, Capital (150,000 x 10%/30%) to record the admission of C to the partnership50,50, Solutions: Requirement (a): Date A, Capital (400,000 x 10...

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Chapter 13 Partnership Dissolution PROBLEM 1: TRUE OR FALSE 1. FALSE 2. FALSE 3. TRUE 4. FALSE 5. FALSE

PROBLEM 2: FOR CLASSROOM DISCUSSION 1. Solution: Date

A, Capital C, Capital (150,000 x 10%/30%)

50,000 50,000

to record the admission of C to the partnership

2. Solutions: Requirement (a): Date A, Capital (400,000 x 10% x 30%) B, Capital (400,000 x 10% x 70%) C, Capital (400,000 x 10%)

12,000 28,000 40,000

to record the admission of C to the partnership

Requirement (b): Capital, beg. Credit Debit Capital, end.

A 150,000 (12,000) 138,000

B 250,000 (28,000) 222,000

C 40,000 40,000

Totals 400,000 40,000 (40,000) 400,000

Page |2 3. Solution: Date Building A, Capital (200,000 x 30%) B, Capital (200,000 x 70%)

200,000 60,000 140,000

to record the revaluation of the building Date

A, Capital (600,000* x 10% x 30%) B, Capital (600,000* x 10% x 70%) C, Capital (600,000* x 10%)

18,000 42,000 60,000

to record the admission of C to the partnership

* (400,000 total capital before revaluation + 200,000 revaluation increase) = 600,000 total capital after revaluation.

4. Solutions: Requirement (a): Date Cash C, Capital

100,000 100,000

to record the admission of C to the partnership

Requirement (b): Capital, beg. Admission of C Capital, end.

A 150,000 150,000

B 250,000 250,000

C 100,000 100,000

Totals 400,000 100,000 500,000

Requirement (c): A = (100% - 10% interest of C) x 30%/100% = 27% B = (100% - 10% interest of C) x 70%/100% = 63% C = 10% 5. Solutions: Requirement (a): Date Cash C, Capital A, Capital (20,000 x 30/100) B, Capital (20,000 x 70/100) to record the admission of C to the partnership

100,000 80,000 6,000 14,000

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Requirement (b): Capital, beg. Admission of C Bonus to old partners Capital, end.

A 150,000 6,000 156,000

B 250,000 14,000 264,000

C 80,000 80,000

Totals 400,000 80,000 20,000 500,000

6. Solution: A, Capital B, Capital Total capital of existing partnership Divide by: (100% less 10% interest of C) Total capital of new partnership Multiply by: Interest of C Investment of C

150,000 250,000 400,000 90% 444,444 10% 44,444

7. Solution: Date

A, Capital B, Capital

150,000 150,000

to record the withdrawal of A from the partnership

8. Solution: Date

A, Capital B, Capital Cash to record the withdrawal of A from the partnership

150,000 70,000 220,000

Page |4 PROBLEM 3: JOURNAL ENTRIES 1. Solution: Date

A, Capital C, Capital (180,000 x 10%/30%)

45,000 45,000

to record the admission of C to the partnership

2. Solutions: Requirement (a): Date A, Capital (480,000 x 10% x 40%) B, Capital (480,000 x 10% x 60%) C, Capital (480,000 x 10%)

19,200 28,800 48,000

to record the admission of C to the partnership

Requirement (b): Capital, beg. Credit Debit Capital, end.

A 180,000 (19,200) 160,800

B 300,000 (28,800) 271,200

C 48,000 48,000

Totals 480,000 48,000 (48,000) 480,000

Requirement (c): Zero – transactions with owners do not give rise to income and expenses. Requirement (d): A

B

Total

40,000 (19,200) 20,800

60,000 (28,800) 31,200

100,000 (48,000) 52,000

Consideration received (100K x 40%); (100K x 60%)

Amount debited to capital account Personal gain (loss)

Page |5 3. Solution: Date Building A, Capital (300,000 x 40%) B, Capital (300,000 x 60%)

300,000 120,000 180,000

to record the revaluation of the building Date

A, Capital (780,000* x 10% x 40%) B, Capital (780,000* x 10% x 60%) C, Capital (780,000* x 10%)

31,200 46,800 78,000

to record the admission of C to the partnership

* (480,000 total capital before revaluation + 300,000 revaluation increase) = 780,000 total capital after revaluation.

4. Solutions: Requirement (a): Date

Cash C, Capital

100,000 100,000

to record the admission of C to the partnership

Requirement (b): Capital, beg. Admission of C Capital, end.

A 180,000 180,000

B 300,000 300,000

C 100,000 100,000

Requirement (c): A = (100% - 10% interest of C) x 40%/100% = 36% B = (100% - 10% interest of C) x 60%/100% = 54% C = 10%

Totals 480,000 100,000 580,000

Page |6 5. Solutions: Requirement (a): Date

Cash C, Capital A, Capital (30,000 x 40/100) B, Capital (30,000 x 60/100)

100,000 70,000 12,000 18,000

to record the admission of C to the partnership

Requirement (b): Capital, beg. Admission of C Bonus to old partners Capital, end.

A 180,000 12,000 192,000

B 300,000 18,000 318,000

C 70,000 70,000

Totals 480,000 70,000 30,000 580,000

6. Solution: A, Capital B, Capital Total capital before revaluation Revaluation increase Adjusted capital Divide by: (100% less 10% interest of C) Total capital of new partnership Multiply by: Interest of C Investment of C

180,000 300,000 480,000 240,000 720,000 90% 800,000 10% 80,000

7. Solution: Date

B, Capital A, Capital to record the withdrawal of B from the partnership

300,000 300,000

Page |7 8. Solution: Date

B, Capital Cash A, Capital

300,000 280,000 20,000

to record the withdrawal of B from the partnership

PROBLEM 4: MULTIPLE CHOICE 1. C 2. C 3. A (200,000 x 40%/60%) = 133,333 4. D 5. A 6. A 7. C (100% - 20% interest of C) x 40% = 32% 8. D 9. B Solution: Date B, Capital A, Capital Cash

120,000 60,000 180,000

to record the withdrawal of B from the partnership

A, Capital after B’s retirement = 200,000 – 60,000 = 140,000 10. A Solution: Date B, Capital A, Capital to record the withdrawal of B from the partnership

* No change in total equity.

120,000* 120,000*

Page |8 PROBLEM 5: CLASSROOM ACTIVITY The students grade themselves and then submit the results to the teacher for recording....