PROBLEM #1

The capital accounts of Loida Cardenas and Cristina San Jose have balances of
P150,000 and P110,000, respectively. Daria Labalan and Helen Magada are to
be admitted to the partnership. Labalan buys one-fifth of Cardenas’ interest for
P35,000 and one-fourth of San Jose’s interest for P25,000. Magada contributes
P70,000 cash to the partnership, for which she is to receive an ownership equity
of P70,000.

REQUIRED:
a.) Journalize the entries to record the admission of Labalan and Magada.
b.) What are the capital balances of Cardenas, San Jose, Labalan, and
Magada after the admission?

SOLUTION:
((b)) Loida Cardenas Cristina S.J. Daria Labalan Helen Magada
150,000.00 110,000.00 30,000.00
(30,000.00) (27,500.00) 27,500.00
120,000.00 82,500.00 57,500.00 70,000.00

((a)) dr. Cardenas, Capital 30,000.00

San Jose, Capital 27,500.00
cr. Labalan, Capital 57,500.00

dr. Cash 70,000.00

cr. Magada, Capital 70,000.00

PROBLEM #2
Castro and Durana are partners who share profits and losses in a ratio of 2:3,
respectively, and have the following capital balances on September 30, 2021:
Castro, Capital
P100,000 Cr.
Durana, Capital
P150,000 Cr.
The partners agreed to admit Garachico to the partnership.

REQUIRED: Calculate the capital balances of Castro, Durana and Garachico

after the admission of Garachico, assuming that Bonuses are recorded when
appropriate for each of the following assumptions:
a.) Garachico paid Castro P50,000 for 40% of his interest.
b.) Garachico invested P50,000 for a one-sixth interest in the partnership.
c.) Garachico invested P50,000 for a 25% interest in the partnership.
d.) Garachico invested P50,000 for a 15% interest in the partnership.

SOLUTION:
((a))
Contributed Capital Agreed capital
Castro 100,000.00 (40,000.00) 60,000.00
Durana 150,000.00 150,000.00
Garachico 40,000.00 40,000.00
250,000.00 - 250,000.00
((b))
Contributed Capital Bonus Agreed Capital
Castro 100,000.00 - 100,000.00
Durana 150,000.00 - 150,000.00
Garachico 50,000.00 - 50,000.00
300,000.00 300,000.00
((c))
Contributed Capital Bonus Agreed Capital
Castro 100,000.00 (10,000.00) 90,000.00
Durana 150,000.00 (15,000.00) 135,000.00
Garachico 50,000.00 25,000.00 75,000.00
300,000.00 - 300,000.00
((d))
Contributed Capital Bonus Agreed Capital
Castro 100,000.00 2,000.00 102,000.00
Durana 150,000.00 3,000.00 153,000.00
Garachico 50,000.00 (5,000.00) 45,000.00
300,000.00 - 300,000.00

PROBLEM #3
Partners Rubite and Buenaventura have capital balances of P100,000 and
P40,000 and share income in a ratio of 4:1, respectively. Rementina is to be
admitted into the partnership with a 20% interest in the business.

REQUIRED: Prepare journal entries to record the admission of Rementina for

each o the following independent situations:
a.) Rementina invested P60,000. Total capital will be P200,000.
b.) Rementina purchased the 20% interest by paying Rubite P22,000 and
Buenaventura P11,000.
c.) Rementina invested P32,000. Total capital will be P172,000.

SOLUTION:
((a)) Contributed Bonus Agreed
Rubite 100,000.00 16,000.00 116,000.00
Buenaventura 40,000.00 4,000.00 44,000.00
Rementina 60,000.00 (20,000.00) 40,000.00
200,000.00 200,000.00

((b)) Contributed Bonus

Rubite 100,000.00 20,000.00
Buenaventura 40,000.00 8,000.00
Rementina 60,000.00 28,000.00
200,000.00

((c)) Contributed Bonus Agreed

Rubite 100,000.00 (1,920.00) 98,080.00
Buenaventura 40,000.00 (480.00) 39,520.00
Rementina 32,000.00 2,400.00 34,400.00
172,000.00 172,000.00

PROBLEM #4
The following condensed statement of financial position is presented for the
partnership of Morales, Gamino, and Quito, who share profits and losses in the
ratio of 4:3:3, respectively.

Cash 40,000 Accounts Payable 150,000

Other assets 710,000 Morales, Capital 260,000
Gamino, Capita 180,000
Quito, Capital 160,000
Total assets 750,000 Total Liabilities and Capital 750,000

Assume that the partnership decided to admit Abello as anew partner with a one
fourth interest.

REQUIRED: For each of the following independent cases, determine the

amount that Abello must contribute in cash or other assets:
a.) No goodwill or bonus will be recorded.
b.) A bonus of P24,000 is to be paid by Abello and allocated to the prior partners.
c.) The partners agreed that the total resulting capital should be P820,000 and
no goodwill should be recognized.
d.) Other assets are written down by P20,000 and a bonus of P40,000 is paid to
Abello at the time of admission.

SOLUTION:
((a)) Morales 260,000.00
Gamino 180,000.00
Quito 160,000.00 600,000.00
Abella 200,000.00
800,000.00

((b)) Contributed Capital Bonus Agreed Capital

Morales 260,000.00 (9,600.00) 250,400.00
Gamino 180,000.00 (7,200.00) 172,800.00
Quito 160,000.00 (7,200.00) 152,800.00
Abella 200,000.00 24,000.00 224,000.00
800,000.00 - 800,000.00

((c)) ratio
Morales 25% 205,000.00
Gamino 30% 246,000.00
Quito 23% 184,500.00
Abella 23% 184,500.00
820,000.00
((d))
Capital Other Assets Adjusted Capital
Morales 260,000.00 (8,000.00) 252,000.00
Gamino 180,000.00 (6,000.00) 174,000.00
Quito 160,000.00 (6,000.00) 154,000.00
Abella -
600,000.00 (20,000.00) 580,000.00

Contributed Capital Bonus Agreed capital

Morales 252,000.00 (16,000.00) 236,000.00
Gamino 174,000.00 (12,000.00) 162,000.00
Quito 154,000.00 (12,000.00) 142,000.00
Abello 193,333.33 40,000.00 233,333.33
773,333.33 - 773,333.33
elen Magada

330,000.00
dr. Cash 60,000.00
cr. Rementina, Capital 60,000.00

dr. Rementina, Capital 20,000.00

cr. Rubite, Capital 16,000.00
Buenaventura, Capital 4,000.00

dr. Rubite, Capital 20,000.00

Buenaventura, Capital 8,000.00
cr. Rementina, Capital 28,000.00

dr. Cash 32,000.00

cr. Rementina, Capital 32,000.00

dr. Rubite, Capital 1,920.00

Buenaventura, Capital 480.00
cr. Rementina, Capital 2,400.00
greed Capital

djusted Capital

greed capital
PROBLEM #1
Salugsugan, Po, and Lacson are partners who share profits and losses in a ratio
of 3:1:2, respectively. Lacson, Capital account has a P500,000 balance.
Salugsugan and Po have agreed to let Lacson take P620,000 of the company’s
cash when she retires.

REQUIRED: Prepare the journal entry to record the withdrawal of Lacson from
the partnership

SOLUTION:
Salugsugan, Capital 90,000.00
Po, Capital 30,000.00
Lacson, Capital 500,000.00
Cash 620,000.00

Salugsugan 120,000.00 Po 120,000.00

x 3/4 x1/4
90,000.00 30,000.00
= 120,000.00

PROBLEM #2
Cheng is planning to withdraw from the partnership of Cheng, Cabarles, and
Genovate on January 3, 2022. At that time, the balances in the partners’ capital
accounts are as follows:

Cheng 60,000
Cabarles 10,000
Genovate 20,000

Prior to Cheng’s withdrawal, the three partners shared profits and losses equally.

REQUIRED:
a.) Prepare the journal entry to record Cheng’s withdrawal supposing she sold
her interest in the partnership to Genovate for P70,000.
b.) Suppose instead that Cheng sold half her interest to Cabarles for P35,000
and half her interest to Genovate for P35,000. Prepare the journal entry to
record the withdrawal of Cheng
SOLUTION:
((a)) Cheng, Capital 60,000.00
Genovate, Capital 60,000.00

((b)) Cheng, Capital 60,000.00

Cabarles, Capital 30,000.00
Genovate, Capital 30,000.00

PROBLEM #3
The following condensed statement of financial position is for partnership of
Lacson, Lianza, and Samoza immediately prior to Samoza’s withdrawal from the
partnership: 400,000 Liabilities 100,000
900,000 Lacson, Capital 400,000
Cash Lianza, Capital 300,000
Other assets Samoza, Capital 500,000
1,300,000 Total liabilities and capital 1,300,000

Total assets

The partners share profits and losses equally.

REQUIRED: Prepare journal entries to record the withdrawal of Samoza given

the following settlement prices:
a.) P500,000
b.) P550,000 (use bonus method only)
c.) P450,000

SOLUTION:
((a)) Samoza, Capital 500,000.00
Cash 500,000.00

((b)) Lacson, Capital 25,000.00

Lianza, Capital 25,000.00
Samoza, Capital 500,000.00
Cash 550,000.00
((c)) Samoza, Capital 500,000.00
Cash 450,000.00
Lacson, Capital 25,000.00
Lianza, Capital 25,000.00

Lacson 50,000.00 Lianza 50,000.00

x 1/2 x 1/2
25,000.00 25,000.00