Exercise 4-1 (Admission of New Partner under Various Assumptions)

Camus and Cuenco our partners have capital balances of 1 Camus, Capital(90K x 1/3) 30,000.00
P90,000 & P60,000 and who share profits 60% and 40% Cuenco, Capital(60K x 1/3) 20,000.00
respectively. they agreed to admit Cerda as a partner upon his Cerda, Capital 50,000.00
payment of P90,000.
To record the investment of Cerda
Instructions: Give the journal entries to record each of the
following independent assumptions: 2 Other Assets 120000.00
Camus, Capital 72,000.00
1. 1/3 of the capital balances of the old partners are transferred Cuenco, Capital 48,000.00
to the new partner, Camus and Cuenco dividing the cash To record the revaluation of assets
between themselves.
Camus, Capital 54,000.00
2. 1/3 of the capital balances of the old partners are transferred Cuenco, Capital 36,000.00
to the new partner, Camus and Cuenco dividing the cash Cedra, Capital 90,000.00
between themselves. However before recording the admission To record the admission of Cedra
of Cerda, asset revaluation is undertaken on the firm books so
that Cerda's capital may be equal to the amount paid for the
New Partnership Capital 90,000.00 1/3 270,000.00
interest.
Asset Revaluation 270,000.00 150,000.00 420,000.00
3. The cash is invested in the business and Cerda is credited Allocation of Asset Revaluation 120,000.00 60% 72,000.00
with a 1/4 interest in the firm, the bonus method being used in 120,000.00 40% 48,000.00
recording his investment.
Camus, Capital Cuenco, Capital
4. The cash is invested in the business and Cerda is credited Capital Balances Bef. Revaluation 90,000.00 60,000.00
with the full amount of his investment which is to be 25% of the Share on Asset Revaluation 72,000.00 48,000.00
new firm capital. Capital Balances After Revaluation 162,000.00 108,000.00

5. The cash is invested in the business and Cerda is credited for

Camus, Capital Cuenco, Capital
P120,000 which includes from Camus and Cuenco.
Capital Balances After Revaluation 162,000.00 108,000.00
Interest Transferred 1/3 1/3
Capital Transferred to Cedra 54,000.00 36,000.00

3 Cash 90,000.00
Cedra, Capital 60,000.00
Camus, Capital 18,000.00
Cuenco, Capital 12,000.00
To record the admission of Cedra

Net investment bef. Admission 150,000.00

Investment of Cedra 90,000.00
Net Asset after Admission 240,000.00
Cedra's Interest in Net Assets 0.25
Cedra's Capital Credit 60,000.00
Investment of Cedra 90,000.00
Bonus to Old Partner -30,000.00

4 Cash 90,000.00
Cerda, Capital 90,000.00
To record the admission of Cedra

Other Asset 120,000.00

Camus, Capital 72,000.00
Cuenco, Capital 48,000.00

AC CC Revaluation
Old(3/4) 270,000.00 150,000.00 120,000.00
New(1/4) 90,000.00 90,000.00 -
360,000.00 240,000.00 120,000.00

5 Cash 90,000.00
Camus, Capital 18,000.00
Cuenco, Capital 12,000.00
Cedra, Capital 120,000.00
To record the admission of Cedra

AC CC BONUS
120,000.00 150,000.00 -30,000.00
120,000.00 90,000.00 30,000.00
240,000.00 240,000.00 -

Camus, Capital Cuenco, Capital

30,000.00 30,000.00
60.00% 40.00%
18,000.00 12,000.00
1 Cular, Capital(80K x1/4) 20,000.00
Canda, Capital 20,000.00
To record the admission of Canda

2 Other Assets 40,000.00

Capco, Capital 20,000.00
Cular, Capital 12,000.00
Cruz, Capital 8,000.00

Capco, Capital 30,000.00

Cular, Capital 23,000.00
Cruz, Capital 17,000.00
Canda, Capital 70,000.00
To record the admission of Canda

New Partnership Capital 70,000.00 0.25 280,000.00

Asset Revaluation 280,000.00 240,000.00 40,000.00
Allocation of Asset Revaluation
Capco 40,000.00 0.50 20,000.00
Cular 40,000.00 0.30 12,000.00
Cruz 40,000.00 0.20 8,000.00

Capco, Capital Cular, Capital Cruz, Capital

Capital Balances Bef. Revaluation 100,000.00 80,000.00 60,000.00
Share on Asset Revaluation 20,000.00 12,000.00 8,000.00
Capital Balances After Revaluation 120,000.00 92,000.00 68,000.00

Capco, Capital Cular, Capital Cruz, Capital

Capital Balances After Revaluation 120,000.00 92,000.00 68,000.00
Interest Transferred 0.25 0.25 0.25
Capital Transferred to Cedra 30,000.00 23,000.00 17,000.00

3 Cash 115,000.00
Candas, Capital 88,750.00
Capco, Capital 13,125.00
Cular, Capital 7,875.00
Cruz, Capital 5,250.00
To record the admission of Candas

Net investment bef. Admission 240,000.00

Investment of Canda 115,000.00
Net Asset after Admission 355,000.00
Canda's Interest in Net Assets 0.25
Canda's Capital Credit 88,750.00
Investment of Cedra 115,000.00
Bonus to Old Partner -26,250.00

Capco, Capital 26,250.00 0.50 13,125.00

Cular, Capital 26,250.00 0.30 7,875.00
Cruz, Capital 26,250.00 0.20 5,250.00
1 Catral, Capital(480K x 1/3) 160,000.00
Conti, Capital 160,000.00
To record the admission of Conti

2 Clemente, Capital(360K x 1/3) 120,000.00

Conti, Capital 120,000.00
To record the admission of Conti

3 Catral, Capital 252,000.00

Clemente, Capital 84,000.00
Other Assets 336,000.00

Catral, Capital 57,000.00

Clemente, Capital 69,000.00
Conti, Capital 126,000.00
To record the admission of Conti

New Partnership Capital 126,000.00 0.25 504,000.00

Asset Revaluation 504,000.00 840,000.00 -336,000.00
Allocation of Asset Revaluation
Catral, Capital -336,000.00 0.75 -252,000.00
Clemente, Capital -336,000.00 0.25 -84,000.00

Catral, Capital Clemente, Capital

Capital Balances Bef. Revaluation 480,000.00 360,000.00
Share on Asset Revaluation -252,000.00 -84,000.00
Capital Balances After Revaluation 228,000.00 276,000.00

Catral, Capital Clemente, Capital

Capital Balances After Revaluation 228,000.00 276,000.00
Interest Transferred 0.25 0.25
Capital Transferred to Cedra 57,000.00 69,000.00

1 Carlos, Capital(200K x 1/4) 50,000.00

Cruz, Capital(300K x 1/3) 100,000.00
Capras, Capital 150,000.00
To record the admission of Caparas

Cash 120,000.00
Carpio, Capital 120,000.00
To record the admission of Carpio

Capital Balances After Admission

Carlos, Capital Cruz, Capital Capras, Capital Carpio, Capital
Beg. Balance 200,000.00 300,000.00
Transferred to Capras 50,000.00 100,000.00 150,000.00
Investment of Carpio 120,000.00
Adjusted Capital 150,000.00 200,000.00 150,000.00 120,000.00
Other Asset 100,000.00
Cuenca, Capital(100K x 1/2) 50,000.00
Claudio, Capital(100K x 1/2) 50,000.00

AC CC Revaluation
Old(3/4) 600,000.00 500,000.00 100,000.00
New(1/4) 200,000.00 200,000.00 -
400,000.00 300,000.00 100,000.00

Cash 200,000.00
Cabral, Capital 175,000.00
Cuenca, Capital 12,500.00
Claudio, Capital 12,500.00
To record the admission of Cabral

Net investment bef. Admission 500,000.00

Investment of Cabral 200,000.00
Net Asset after Admission 700,000.00
Cabral's Interest in Net Assets 0.25
Cabral's Capital Credit 175,000.00
Investment of Cedra 200,000.00
Bonus to Old Partner -25,000.00
Allocation of Bonus
Cuenca, Capital 25,000.00 0.50 12500
Claudio, Capital 25,000.00 0.50 12500

Cash 120,000.00
Chiu, Capital 99,000.00
Choy, Capital 9,000.00
Chua, Capital 6,000.00
Cheng, Capital 6,000.00
To record the admission of Chiu

Net investment bef. Admission 375,000.00

Investment of Chiu 120,000.00
Net Asset after Admission 495,000.00
Chiu's Interest in Net Assets 0.20
Chiu's Capital Credit 99,000.00
Investment of Cedra 120,000.00
Bonus to Old Partner -21,000.00

Allocation of Bonus
Choy, Capital 21,000.00 0.43 9000
Chua, Capital 21,000.00 0.29 6000
Cheng, Capital 21,000.00 0.29 6000

AC CC Revaluation
Old(4/5) 480,000.00 375,000.00 105,000.00
New(1/5) 120,000.00 120,000.00 -
600,000.00 495,000.00 105,000.00