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CH 011

1. The document describes two partnership scenarios involving changes in partner capital accounts. The first scenario details Eddy retiring from a partnership and being paid out, affecting the other partners' capital balances. The second scenario involves a partner, Claude, retiring and being paid out at two different amounts, affecting the remaining partners' capital balances. 2. A third scenario discusses a partner, Jill, retiring from a partnership and receiving a payout that exceeded her capital balance, reducing the capital balances of the remaining partners, Bill and Hill. 3. A fourth scenario involves admitting a new partner, Mark, who pays cash and a bonus to an existing partner, Ken, for a share of the partnership. The admission affects the total

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Joana Trinidad
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1K views2 pages

CH 011

1. The document describes two partnership scenarios involving changes in partner capital accounts. The first scenario details Eddy retiring from a partnership and being paid out, affecting the other partners' capital balances. The second scenario involves a partner, Claude, retiring and being paid out at two different amounts, affecting the remaining partners' capital balances. 2. A third scenario discusses a partner, Jill, retiring from a partnership and receiving a payout that exceeded her capital balance, reducing the capital balances of the remaining partners, Bill and Hill. 3. A fourth scenario involves admitting a new partner, Mark, who pays cash and a bonus to an existing partner, Ken, for a share of the partnership. The admission affects the total

Uploaded by

Joana Trinidad
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
  • Financial Calculations and Adjustments: Covers various financial scenarios involving partnership balance sheets, profit-sharing, asset revaluation, and capital adjustments.

1.

On June 30, 2018 the condensed balance sheet for the partnership of Eddy, Fox and Grimm
together with their respective profit and loss sharing percentage was as follows
Assets, net of liabilities P 320,000
Eddy , Capital (50%) P 160,000
Fox, Capital (30%) P 96,000
Grimm, Capital (20%) P 64,000
P 320,000

● Eddy decided to retire from the partnership and by mutual agreement is to be paid
P180,000 out of partnership funds for his interest. Total goodwill implicit in the
agreement is to be recorded. After Eddy’s retirement, what are the capital balances of
the other partner?
108,000(Fox) 72,000(Grimm)

● Assume that Eddy remains in the partnership and that Hamm is admitted as a new
partner with a 25% interest in the capital of the new partnership for a cash payment of
P140,000. Total goodwill implicit in the transaction is to be recorded. Immediately after
admission of Hamm, Eddy’s capital account balance should be
P210,000

2. Matthew, Paulo and Claude share partnership profits in the ratio [Link]. On September, 30
Claude opted to retire from the partnership. Prior to Claude’s investment, the capital
balances of the three partners are P25,000 ,P40,000 and P35,000, respectively.

● How much is Paulo’s capital after Claude’s retirement if Claude is paid P30,000 in full
settlement of his partnership interest?
P43,000

● How much is the capital of Matthew after Claude’s retirement if Claude is paid P39,000
in full settlement of his partnership interest?
P23,400

3. When Jill retired from the partnership of Jill, Bill and Hill, the final settlement of her interest
exceeded her capital balance. Under the bonus method, the excess
Reduced the capital balance of Bill and Hill

4. Jeric, Ken, and Lemuel are partners sharing profits in the ratio [Link] respectively, as of
December 31, 2013, their capital balances were P95,000 for Julian, P80,000 for Ken and
P60,000 for Lemuel.
On January 1, 2019 the partners admitted Mark as a new partner and according to their
agreement Mark will contribute P80,000 in cash to the partnership and also pay P10,000 for
15% for Ken’s share. Mark will be given a 20% share in profits. While the original partners’
share will be proportionately the same as before. After the admission of Mark, the total
capital will be P330,000 and Mark’s capital will be P70,000
● The bonus in the admission of Mark would be
P22,000

● The balance of Ken’s Capital after the admission of Mark would be


P79,100

● The amount of asset revaluation is


P15,000

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