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ParCor 2019 Chapter 4
ParCor 2019 Chapter 4
Ex. 1
Ben Bob Total
Capital balances 12/31 240,000 P260,000 P500,000
Share in net income P125,000 P125,000 P250,000
Drawings (60,000) (120,000) ( 180,000)
Revalue equipment (15,000) (15,000) (30,000)
Updated capital accounts 7/1/16 P290,000 P250,000 P540,000
a)
Income S 250,000
Ben, Drawing 125,000
Bob, Drawing 125,000
EX 2
a)1. Lena, Capital 100,000
Rod, Capital 100,000
c) P150,000
d) P240,000 payment against P250,000 actual interest of the three partners = loss of P10,000
a. Ex. 3
a) Daisy, Capital 160,000
Maggie, Capital 160,000
P 400,000
Bonnie
a.b) Bonnie, Capital 200,000 160,000
Maggie, Capital 200,000 160,000 Daisy 160,000
P 720,000
c. Land 160,000
Bonnie, Capital 80,000
Daisy Capital 80,000
Revaluation
Daisy’s Interest P 320,000
Payment (200,000 x 2) 400,000
Excess (share of Daisy in the asset rev) P 80,000 Revised PE
Total Asset Rev P 160,000 Bonnie P 480,000
Daisy 200,000
Daisy, Capital 200,000 Maggie 200,000
Maggie, Capital 200,000 P 880,000
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d. Bonnie, Capital 60,000
Daisy, Capital 60,000
Plant assets 120,000
Revaluation
Total Partnership Equity P 720,000
Payment (300,000 x 2) 600,000
Decrease Plant Assets P 120,000 Revised PE
Bonnie P 170,000
Bonnie, Capital 170,000 Daisy 130,000
Daisy, Capital 130,000 Maggie 300,000
Maggie, Capital 300,000 P 600,000
EXERCISE 4
. Capital Adjusted
Partners Balances Balances Difference
Edgar P 400,000 30% P360,000 P (40,000)
Paz 500,000 40% 480,000 (20,000)
Emy 300,000 30% 360,000 60,000
P1,200,000 P1,200,000
Exercise 5
1,200,000 of the partnership x .15= 180,000 x 4/9 and 5/9= 80,000 and 100,000
Exercise 6
Orig Asset Rev a) Adjusted Transfer d)Revised Revised e) Profit
Captl Bal PE P and L Share
Pen 450,000 16,000 466,000 466,000 40.00% P140,000
May 650,000 24,000 674,000 x.4 (269,600) 404,400 20.00% 70,000
Wen 269,600 269,600 40.00% 140,000
1,100,000 40,000 1,140,000 1,140,000 P350,000
Inventory 58,000
Pen, Capital 24,000
May, Capital 16,000
Accounts Receivable 18,000
Exercise 7
Pen 466,000
May 674,000 Cash 760,000
Wen 760,000 Wen, Capital 760,000
1,900,000
Exercise 8
First Option: Total Cont Agreed Equity Bonus Entry
Pen 466,000 36,000 Cash 50,000
May 674,000 54,000 Pen, Captl 36,000
Wen 500,000 (25%)410,000 (90,000) May, Captl 54,000
1,640,000 1,640,000 Wen, Captl 410,000
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Option 2: Total Cont. Agreed Equity Downward Adj. Bonus
Pen 466,000 ( 96,000) Pen, Captl 96,000
May 674,000 (144,000) May, Captl 144,000
Wen 300,000 (25%)300,000 Assets 240,000
1,440,000 1200,000 (240,000)
Cash 300,000
Wen,Captl 300,000
Option 2 may be frowned upon, cash investment is lower by P10,000, and bonus to be sacrificed is
higher that Option 1 and the new partner gets the same 30% interest over assets and profits.
Exercise 9
Option a: Agreed equity 120,000/30%= 400,000 – 320,000 total contributions= asset rev of P80,000
Assets 80,000
Athena, Capital 48,000
Apollo, Capital 32,000
Cash 120,000
Titus, Capital 120,000
Option b: Agreed equity 75,000/30%= 250,000 – 270,000 total contributions= asset impair of P20,000
Cash 70,000
Titus, Capital 70,000
EXERCISE 10
Capital Agreed
a. Balances Balances
Fiona P 350,000 P300,000 Cash 300,000
Gary 250,000 200,000 Romy, Capital 300,000
Romy 300,000 300,000
P 900,000 P900,000
Exercise 11
Investment Bonus Agreed
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PE
Chen P 2,000,000 250,000 2,250,000
Fran 1,000,000 250,000 1,250,000 Cash 2,000,000
Paula 2,000,000 (500,000) 1,500,000 30% Paula Capital 1,500,000
P5,000,000 5,000,000 Chen Capital 250,000
Fran Capital 250,000
Assets 1,000,000
Chen 500,000
Fran 500,000
Cash 2,000,000
Paula 2,000,000
d.
Investments Revaluation Bonus Agreed
Chen P2,000,000 (100,000) (200,000) 1,700,000
Fran 1,000,000 (100,000) (200,000) 700,000
Paula 2,000,000 400,000 2,400,000* =Bonus to Paula
5,000,000 (200,000) 4,800,000 =Asset impaired
*4,800,000 x .5=2,400,000-200,000
Cash 2,000,000
Chen 200,000
Fran 200,000
Paula 2,400,000
e.
Investments Goodwill Agreed should be
higher
Chen P2,500,000
Fran 1,000,000
Paula 2,000,000
5,500,000
If 3,000,000 = 60% interest then agreed will become = P5,000,000 which is lower than actual. Agreement is not valid.
If interest is higher say 50% for Chen, then P3,000,000 for current partners will be also 50%. Total agreed will become
P6,000,00 against actual of P5,500,000= goodwill for the new partner.
Exercise 12
a) Update first Edna Capital: P300,000 + Share in Rev 15,000 (.1 x 150,000) = P315,000
Cash settlement P360,000-P315,000= bonus of P45,000
Or
Assets 150,000
Freda, Capital 60,000………… P500,000 + P60,000= P560,000
Alida, Capital 45,000 400,000 + 45,000 = 445,000
Minda, Capital 30,000 300,000 + 30,00 0 = 330,000
Edna, Capital 15,000
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EXERCISE 14
a.
Income Summary 150,000
Liza, Drawing 60,000
Fe, Drawing 60,000
Arman, Drawing 30,000
3. Assets 425,000
Liza, Capital 170,000
Fe, Capital 170,000
Arman, Capital 85,000
200-115= 85 for Arman/,2= 425,000 – 85,000=340,000 x
.5= 170,000 for each partner.
EXERCISE 15
800,000- 750,000= P50,000 share in asset impairment x 3= total P150,000
1,100,000 + 300,000= 1,400,000 x .25= 350,000 against 300,000= bonus to new partner.
EXERCISE 16- 17
2015
1/1/15 Profit Drawings 12/31/14 Profit Drawings 7/1/15
Carl 120,000 160,000 (120,000) 160,000 48,000 (60,000) 148,000
Weber 70,000 130,000 (90,0000) 110,000 36,000 (45,000) 101,000
Larins 80,000 130,000 ( 90,000) 120,000 36,000 (45,000) 111,000
270,000 420,000* 390,000 120,000 (150,000) 360,000
2015 Profit*
Salaries Bonus Balance Total
Carl 120,000 43,637 163,637
Webster 90,000 5,454 32,727 128,181
Larins 90,000 5,455 32,727 128,182
300,000 10,909 109,091 420,000
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July 2016
Salaries Bonus Balance Total
Carl 60,000 (12,000) 48,000
Webster 45,000 ( 9,000) 36,000
Larins 45,000 ( 9,000) 36,000
150,000 (30,000) 120,000
128,182 + 36,000= 164,182
Larins, Capital 164,182
Cash 100,000
Carlson (64,182 x 36,675
4/7)
Webster( x 3/7) 27,507
EXERCISE 18
a. 2014
Entry for Investment
Cash 1,200,000
Ria, Capital 300,000
Celso, Capital 400,000
Mercy, Capital 500,000
Withdrawal
Ria, Drawing 30,000
Celso, Drawing 30,000
Mercy, Drawing 30,000
Cash 90,000
Distribution of Profit
Income Summary 300,000
Ria, Drawing 82,500
Celso, Drawing 100,000
Mercy, Drawing 117,500
210,000 x 3/12 = 52.5 + 30 X 4/12=70 + 30 X 5/12=87.5 +30
b. Ria - Celso - Mercy -
Beginning P 300,000 P400,000 P500,000
Share in Net Profit 82,500) 100,000 117,500
Drawings ( 30,000) ( 30,000) ( 30,000)
Capital, Ending P352,500 P470,000 P587,500
2015
a. Ria, Drawing 60,000
Celso, Drawing 60,000
Mercy, Drawing 30,000
Cash 150,000
Mercy, Capital 500,000
Mercy Drawing 57,500
Payable to Mercy’s Estate 557,500
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2016
Interest Expense (633,819 x .18 x 1/12) 9,507
Payable to Mercy’s Estate 633,819
Cash 643,426
EXERCISE 19
a. Appropriation Account 20,000
Allowance for Bad Debts 20,000
d. Cash 705,000
Accounts Receivable 500,000
Merchandise Inventory 700,000
Furniture and Equipment 500,000
Allowance for Bad Debts 25,000
Accounts Payable 200,000
Share Capital (43,600 x50) 2,180,000
Cash 1,570,000
Share Capital 1,070,000
75,000- 43,600= 31,400 x P50
e. Cash 3,250,000
Share Capital 3,250,000
65,000 x P50
LEGAL ISSUE-
Liabilities incurred prior to admission of a new partner stands as liabilities of the partnership with
priority over the assets. It is not a valid agreement for a new partner to exempt himself from these liabilities.
He is liable up to the extent of his contribution. There must be consent by all the current partners. Change
in profit ratio must be agreed upon by all partners.
ACOUNTING ISSUE:
Yes, Joey’s share will increase by P30,000 with the new investment.
1,100,000 1,100,000
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