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  • AlagangWency - Partnersip Dissolution Short Quiz

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    Kristian Paolo De Luna
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    The document describes three cases involving the admission of a new partner, Carrots, to an existing partnership between Apple and Banana. Case 1 asks the student to record the journal entry for Carrots acquiring half of Banana's 40% interest for $800,000. It also asks them to calculate the new capital account balances and profit/loss sharing ratios. Case 2 involves Carrots investing $165,000 cash for a 20% interest in the partnership. The student must record this journal entry and recalculate the capital account balances and new profit/loss ratios. Case 3 asks how much cash Carrots should contribute to obtain a 2/5 (40%) interest in the partnership.

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    The document describes three cases involving the admission of a new partner, Carrots, to an existing partnership between Apple and Banana. Case 1 asks the student to record the journal entry for Carrots acquiring half of Banana's 40% interest for $800,000. It also asks them to calculate the new capital account balances and profit/loss sharing ratios. Case 2 involves Carrots investing $165,000 cash for a 20% interest in the partnership. The student must record this journal entry and recalculate the capital account balances and new profit/loss ratios. Case 3 asks how much cash Carrots should contribute to obtain a 2/5 (40%) interest in the partnership.

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    449 views1 page

    AlagangWency - Partnersip Dissolution Short Quiz

    Uploaded by

    Kristian Paolo De Luna
    The document describes three cases involving the admission of a new partner, Carrots, to an existing partnership between Apple and Banana. Case 1 asks the student to record the journal entry for Carrots acquiring half of Banana's 40% interest for $800,000. It also asks them to calculate the new capital account balances and profit/loss sharing ratios. Case 2 involves Carrots investing $165,000 cash for a 20% interest in the partnership. The student must record this journal entry and recalculate the capital account balances and new profit/loss ratios. Case 3 asks how much cash Carrots should contribute to obtain a 2/5 (40%) interest in the partnership.

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    #AlagangWency

    Partnership Dissolution
    QUIZ:
    Use the following information for the next three cases:
    Carrots joins the partnership of Apple and Banana. Before the admission of Carrots, the partnership
    statement of financial position shows the following information:

    Cash 30,000
    Accounts receivable 140,000
    Inventory 200,000
    Equipment 500,000
    Total assets 870,000

    Accounts payable 80,000


    Apple, Capital (60%) 515,000
    Banana, Capital (40%) 275,000
    Total liabilities and equity 870,000

    The following adjustments are determined:


    a. The recoverable amount of the accounts receivable is ₱120,000.
    b. The inventory has a net realizable value of ₱160,000.
    c. The equipment has a fair value of ₱450,000.
    d. Unrecorded liabilities amount to ₱20,000.

    Case #1: Carrots acquires half of Banana’s interest for ₱800,000.


    Requirements:
    a. Provide the entry to record the admission of Carrots.
    b. Determine the balances of the partners’ capital accounts after the admission of Carrots.
    c. Determine the profit or loss sharing ratio of the partners after the admission of Carrots.

    Case #2: Carrots invests ₱165,000 cash to the partnership in exchange for a 20% interest. Carrots’
    capital account is credited for the fair value of the 20% interest he acquired.
    Requirements:
    a. Provide the journal entry to record the admission of Carrots.
    b. Compute for the capital balances of the partners following the admission of Carrots.
    c. Determine the profit or loss sharing ratio of the partners after the admission of Carrots.

    Case #3: If Carrots is to invest sufficient cash to obtain 2/5 interest in the partnership, how much
    should Carrots contribute to the new partnership?

    “The name of the Lord is a strong tower; the righteous run to it and are safe.” (Proverbs 18:10)
    - END -

    -WMG

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