UNIVERSITY OF CEBU-BANILAD

COLLEGE OF BUSINESS ADMINISTRATION

BANILAD, CEBU CITY
Accounting 2 (Admission &Withdrawal of Partners)
Name ______________________ Course & Year __________ Schedule ______________ Score _____

I – Multiple Choice. Encircle the letter of the best answer in each of the statement/s.
1. Tolentino invested P400,000 for a 20% interest in a partnership that has capital totaling P1,500,000
after admitting Tolentino. Which of the following is true?
a. Tolention’s capital is P400,000
b. Tolentino received a bonus of P100,000.
c. The original partners received a bonus of P100,000.
d. The original partners’ capital in the business was P1,200,000 before admitting Tolentino.
2. If a bonus is traceable to the old partners rather than to a new partner, it is allocated among the partners
according to the
a. capital ratio of the old partners
b. capital ratio of the new partnership
c. profit and loss ratio of the old partnership
d. profit and loss ratio of the new partnership
3. Marasigan, Cabance, and Tan are in a partnership. Tan decides she wants to withdraw from the
partnership by selling her interest to Blanche. Marasigan and Cabance agree to this. Marasigan’s and
Cabance’s capital accounts
a. will not be affected when Blanche is admitted
b. cannot be determined from the information given
c. will increase when Blanche is admitted
d. will decrease when Blanche is admitted
4. Which of the following will not result in dissolution of a partnership?
a. Incapacity of a partner
b. Negative capital balance of a partner
c. Bankruptcy of a partner
d. Admission of a new partner
5. Which of the following results in the dissolution of a partnership?
a. The withdrawal of a partner from a partnership.
b. The receipt of share in profit by an existing partner.
c. The contribution of additional assets to the partnership by an existing partner.
d. The winding up of the partnership and the dissolution of remaining assets to the partners.
6. The admission of a new under the bonus method will result in
a. bonus to the old partners only
b. bonus to the new partner only
c. bonus to either the new partner or the old partners, but not both.
d. None of the above.
7. A partnership agreement most likely will stipulate that assets be reappraised when
a. the partnership is liquidated
b. a partner leaves the partnership
c. profits and losses are being distributed
d. new partner is admitted to the partnership
8. Which of the following best characterizes the bonus method of recording a new partner’s investment in
a partnership?
a. Net assets of the old partnership are not revalued.
b. The new partner’s initial capital balance is equal to his investment.
c. The bonus always results in an increase to the old partner’s capital balances.
d. Assuming that recorded assets are properly valued, the book value of the new partnership is equal
to the book value of the old partnership and the investment of the new partner.
9. Total partner’s equity will not change when a withdrawing partner
a. withdraws assets equal to his capital balance
b. sells his interest to a new or remaining partner
c. withdraws assets amounting to less than his capital balance
d. withdraws assets amounting to greater than his capital balance
10. When a partner withdraws from a partnership taking assets that represent less than his capital balance,
a. no bonus results
b. the remaining partners receive a bonus
c. the withdrawing partner receives a bonus
 d. the remaining partners owe the withdrawing partner the difference
11. Perdio paid Tria P600,000 for her P400,000 interest in a partnership. On the partnership books,
a. Perdio will receive a bonus
b. Perdio will give up a bonus
c. Perdio will have a capital balance of P600,000
d. Perdio will have a capital balance of P400,000
12. Pascual invested P400,000 for a 10% interest in a partnership that has total capital of P3,000,000 after
admitting Pascual. Which of the following is true?
a. Pascual’s capital is P260,000
b. Pascual received a bonus of P100,000
c. The original partners received bonus of P100,000
d. The original partners’ capital in the business was P2,700,000 before admitting Pascual.

II - Give the requirements accordingly with supporting computation/s.

A. Perez and Daganta are partners who share profits and losses in a ratio of 2:1 and have capital
balances of P750,000 and P1,500,000 respectively. The partners agreed to admit Barros to the
partnership. Barros invested P750,000 for a 35% interest in the partnership. The new total capital
balance after admitting Barros is P3,000,000.
Required: Daganta’s capital balance after Barros is admitted is ________________

B. Garachico invested P100,000 for a one-third interest in a partnership in which the other partners
have capital totaling P260,000 before admitting Garachico.
Required: After distribution of the bonus, what is Garachico’s capital? ______________

C. Partners Chung, Detoya, and Digao share profits and losses in a 3:1:2 ratio, respectively. Detoya
wishes to leave the partnership, so the assets are revalued and are found to be overvalued by
P300,000.
If each partner had a capital balance of P500,000 prior to Detoya’s notification of withdrawal, what
amount should Detoya be allowed to withdraw from the partnership? ______________

D. Villon invested P600,000 for a 30% interest in a partnership in which the other partners have
capital totaling P1,000,000 before admitting Villon. After distribution of the bonus, what is Villon’s
capital balance? ______________

E. Narvaez invested P400,000 for a one-fourth interest in a partnership in which the other partners
have capital totaling P800,000 before admitting Narvaez.
After distribution of the bonus, what is Narvaez’s capital balance? ______________

F. Dellosa bought Longalong’s interest in the Seechua and Longalong Partnership by a P600,000
direct payment to Longalong. The capital balances before the sale were P240,000 and P360,000,
respectively.
What will be the amount in Dellosa’s Capital account? ______________
G. Partners Yacapin, Babaran, and Cuenca share profits and losses in a 5:3:2 ratio, respectively.
Yacapin wishes to leave the partnership, so the assets are revalued and are found to be overvalued by
P60,000. If each partner had a capital balance of P200,000 prior to Yacapin’s notification of
withdrawal, what amount should Yacapin be allowed to withdraw from the partnership?
______________

H. Mulles invested P600,000 for a one-fifth interest in a partnership in which the other partners have
capital totaling P1,200,000 before admitting Mulles.
After distribution of the bonus, Mulle’s capital is ________________

I. Items below is based on this given data:

Partners Capital Balances P/L Ratio
Jeil P120,000 40%
Neil 160,000 30%
Bebie 100,000 30%
Macmac is admitted in the partnership by allowing him to purchase 1/5 of the partnership interest for
P90,000.
Required:
1. At what amount will Macmac, the new partner be credited upon admission? _______________
 2. What would be the partners new profit and loss ratio after Macmac’s admission? ____________
3. Bonus if any _____________
4. How much is the respective share of the old partners on the P90,000 payment of Macmac? Jeil
_________ Neil ______________ Bebie ________________

J. Mr. Rene Cabahug and Mr. Joe Yloc are partners who shared profit and losses on an arbitrary ratio of
3:2. Mr. Sap Ong was admitted in the partnership by buying ¼ and ½ of the respective old partners
interest in the partnership. The partners capital balances before the purchase were as follows:
R. Cabahug P200,000
J. Yloc 250,000

Required:
1. Determine each of the partners capital balances after admission assuming Sap Ong pays
P200,000. Cabahug ______________ Yloc ________________ Sap Ong _____________
2. Journal entry under each of the given assumptions.
a. Upon payment of Sap Ong by P200,000.
_

b. Upon payment by Sap Ong by P150,000.

_

K. Capital balances and profit and loss percentages for the partnership of Melvin, Sani and Tony on
January 1, 2003 are as follows:
Melvin (40%) P240,000
Sani (20%) 160,000
Tony (40%) 280,000
Total P680,000

On January 3, 2003, the partners agreed to admit Bart into the partnership for a 25% interest in capital
and profits for his investment in the partnership of P220,000 for an agreed capitalization of P900,000.

Required: Determine the following:

1. Capital credit of Bart in the new partnership ______________
2. Bonus to ____________ if any, Amount ______________
3. Capital credit of Melvin in the new partnership ______________
4. Journal entry to record the admission of Bart.
_

L. Dimamatay and Dimaano are partners with a profit and loss sharing ratio of 60%-40%. Dimamatay
finally died of a cardiac arrest on February 14 and immediately an interim financial statement was
prepared as of that cut-off date which shows the following capital balances without recognizing the
accrued liability, net realizable value and fair market values of the non-cash assets.
Partners Capital Balances as of February 14
Dimamatay P1,900,000
Dimaano 1,530,000
The following adjustment should be made:
Book Value Net Realizable Value/Fair market value
Accounts Receivable P130,000 P120,000
Inventory 260,000 290,000
Equipment 400,000 500,000

Accrued expenses of P20,000 should be booked.

Required:
1. Adjusting entries to update the balances of accounts at the time of death.
 2. Dimamatay’s adjusted capital balance ______________
3. Journal entry to record the settlement of the heirs of Dimamatay.
-

4. If Dimaano settles the claim for P2,000,000, what is the necessary entry if the excess payment he
gave was treated as a bonus.
_

M. The adjusted capital balances of the partners of Tea for Two Snack House who shared profit and loss
equally follow:
Khalyl P160,000
Khyle 200,000
Kay 180,000

Khalyl is planning to sell his interest and the partnership is interested of buying this.

Requirements:
1. If partnership will buy his interest for P190,000 and the difference is assumed to be bonus,
determine the capital balance of each of the remaining partners and prepare journal entry to
record the withdrawal of Khalyl.
_

2. If partnership will buy his interest for P75,000 and the difference is assumed to be bonus, what
necessary journal entry should be made in the partnership book.
Khyle ________________ _
Kay ________________

N. Mr. Heng and Mr. Seng are partners who shared profit and loss on a 3:2 basis. They wished to expand
their business, so that they invited Mr. King to join with them by allowing her to invest cash of
P100,000 and equipment with a fair market value of P120,000 (net book value of the equipment was
P80,000), for a ¼ interest in the firm. The details of their respective capital accounts follow:
Cash P240,000
Other Assets 480,000
Mr. Heng, Capital P400,000
Mr. Seng, Capital 320,000
#
Required:
1. Bonus to ____________(if any) Amount _____________
2. Capital balances of the partners after the admission
Mr. Heng _________________ Mr. Seng _______________ Mr. King ______________
3. Journal entry to record the admission of Mr. King.
_
Key:
I–
1. C
2. C
3. A
4. B
5. A
6. C
7. B
8. D
9. B
10. B
11. D
12. C

II –

A. 1,400,000
B. 120,000
C. 450,000
D. 480,000
E. 300,000
F. 360,000
G. 170,000
H. 360,000
I. 1. 76,000
2. Jeil 32% Neil 24% Bebie 24% Macmac 20%
3. None / -0- (Purchase of Interest)
4. Jeil 29,600 Neil 36,200 Bebie 24,200
J. 1. Cabahug 150,000 Yloc 125,000 Sap Ong 175,000
2. a. Cabahug, Capital 50,000
Yloc, Capital 125,000
Sap Ong, Capital 175,000
#
b. Cabahug, Capital 50,000
Yloc, Capital 125,000
Sap Ong, Capital 175,000
#
K. 1. 225,000
2. Bart 5,000
3. 238,000
4. Cash 220,000
Melvin, Capital 2,000
Sani, Capital 1,000
Tony, Capital 2,000
Bart, Capital 225,000
#
L. 1. -Income & Expense Summary 10,000
Allowance for Doubtful Accounts 10,000
#
- Inventory 30,000
Income & Expense Summary 30,000
#
- Accumulated Depreciation 100,000
 Income & Expense Summary 100,000
#
-Income & Expense Summary 20,000
Accrued Expenses 20,000
#
-Income & Expense Summary 100,000
Dimamatay, Capital 60,000
Dimaano, Capital 40,000
#
2. 1,960,000
3. Dimamatay, Capital 1,960,000
Cash 1,960,000
#
4. Dimamatay, Capital 1,960,000
Dimaano, Capital 40,000
Cash 2,000,000
#
M. 1. Khyle 185,000
Khalyl 165,000

-Khalyl, Capital 160,000

Khyle, Capital 15,000
Kay, Capital 15,000
Cash 190,000
#
2. - Khalyl, Capital 160,000
Cash 75,000
Khyle, Capital 42,500
Kay, Capital 42,500
#
N. 1. King 15,000
2. Heng 391,000
Seng 314,000
King 235,000
3. -Cash 100,000
Equipment 120,000
Mr. Heng, Capital 9,000
Mr. Seng, Capital 6,000
Mr. King, Capital 235,000
#