Beruflich Dokumente
Kultur Dokumente
CHAPTER 3
MULTIPLE CHOICE ANSWERS AND SOLUTIONS
3-1:
c
Implied capital of the partnership (P90,000/20%)
P450,000
Actual value of the partnership
( 420,000)
Goodwill
30,000
HIZON
Capital balances before Goodwill
Goodwill to old partners
_____
Total
Purchase by Hizon (20%)
_90,000
Capital balances after admission
P 90,000
3-2:
DAVID
P252,000
__18,000
P126,000
___9,000
P42,000
__3,000
P270,000
( 54,000)
P135,000
( 27,000)
P45,000
( 9,000)
P216,000
P108,000
P36,000
AQUINO
LOCSIN
DAVID
P252,000
( 50,400)
P126,000
( 25,200)
P42,000
( 8,400)
P201,600
P100,800
P33,600
AQUINO
LOCSIN
DAVID
P 50,400
P 25,200
P 8,400
__3,600
__1,800
___600
P 54,000
P 27,000
P 9,000
d
TOTAL
Capital transferred
P 84,000
Excess divided using profit and loss ratio
__6,000
Cash distribution
P 90,000
3-4:
LOCSIN
b
HIZON
Capital balances before admission
Purchase by Hizon (20%)
_84,000
Capital balances after admission
P 84,000
3-3:
AQUINO
b
Selling price
Interest sold (444,000X1/5)
Combine gain
P132,000
( 88,800)
P 43,200
3-5:
b
Implied value of the partnership (P40,000/1/4)
P160,000
Actual value
( 140,000)
Goodwill
20,000
DIAZ
Cash balances
P 20,000
Goodwill, Profit and Loss ratio
__2,000
Total
BERNAL
CUEVAS
P 80,000
P40,000
__12,000
__6,000
P 92,000
P46,000
( 23,000)
( 11,500)
P 69,000
P34,500
BANZON
CORTEZ
P 16,000
P 4,000
__6,000
__4,000
P 22,000
P 8,000
PEREZ
CADIZ
P 24,000
P 48,000
5,430
10,860
000
Capital Transfer (1/4)
( 5,500)
Capital balances after admission
P 16,500
49
Chapter 3
3-6:
b
TOTAL
Capital Transfer (20%)
P20,000
Excess, Profit and Loss ratio
_10,000
Cash distribution
P30,000
3-7:
d
TOTAL
Capital balances beginning
P 72,000
Net profit, 1:2
16,290
Drawings
( 5,050)
( 8,000)
P 24,380
P 50,860
( 5,570)
( 13,240)
P 18,810
P 37,620
,050)
Capital balances before admission
P 75,240
Capital transfer (squeeze)
(18,810) (1/4)
Capital balances after admission 1:2
P 56,430
Capital transfer
P18,810
Excess, 1:2
_11,190
Cash
P30,000
3-8:
P 5,570
P 13,240
__3,730
__7,460
P 9,300
P 20,700
a
Total agreed capital (P150,000/5/6)
Diana's Interest
Cash distribution
3-9:
3-10:
P180,000
1/6
P 30,000
a
Total agreed capital (P36,000/1/5)
Total contributed capital (80,000+40,000+36,000)
Unrecognized Goodwill
P180,000
( 156,000)
P 24,000
Increase
(Dec.)
(P 10,000)
_10,000
P
Old partners
New partner
Total
Contributed
Agreed
Capital
Capital
P110,000
P100,000
__40,000
__50,000
P150,000
P150,000
P 60,000
( 6,000)
P 54,000
c
Total agreed capital (P40,000+20,000+17,000)
Pete's interest
Pete's agreed capital balance
P 77,000
1/5
P 15,400
3-12:
b
Old partner
New partner
Total
Contributed
Capital
P 65,000
25,000 (1/3)
P 90,000
Agreed
Capital
P60,000
30,000
P90,000
Increase
(Dec.)
(P 5,000)
_5,000
P
FRED
P 35,000
RAUL
P30,000
LORY
25,000
Bonus to Lory
Capital balances after admission
3-13:
(
3,500)
P 31,500
( 1,500)
P28,500
c
Total agreed capital (90,000+60,000+70,000)
Augusts' interest
Agreed capital
Contributed capital
Bonus to June & July
P220,000
_____1/4
P 55,000
__70,000
P 15,000
JUNE
P90,000
__7,500
P97,500
JULY
P 60,000
__7,500
P 67,500
a
Total agreed capital (52,000 + 88,000)/80%)
Total capital of Mira & Nina after admission
Cash paid by Elma
3-15:
__5,000
P 30,000
P175,000
( 140,000)
P 35,000
a
Total agreed capital (P41,600/2/3)
Total contributed capital (P23,000+18,600+16,000)
Goodwill to new partner, Ang
LIM
P23,000
_____
P23,000
P 62,400
( 57,600)
P 4,800
ONG
P 18,600
______
P 18,600
ANG
16,000
__4,800
P20,800
51
Chapter 3
3-16:
ANG
BENG
CHING
DONG
P600,000
P 400,000
P 300,000
( 300,000)
_______
_______
_______
300,000
_300,000
TOTAL
P 400,000
P 300,000
P600,000
150,000
__37,500
100,000
__25,000
( 100,000)
P 587,500
P 425,000
CC
AC
P 1,000,000 P1,500,000
600,000 (25%) __500,000
P 1,600,000 P2,000,000
400,000
P500,000
Inc. (Dec.)
P500,000
( 100,000) Bonus
P400,000 GW
3-17: b
Capital balances before
admission of Alma
P 200,000
Admission of Alma:
Investment
Goodwill to old partner,
70:30 (sch. 1)
___40,000
Capital balances before
admission of Lorna
P 320,000
Admission of Lorna:
Goodwill Written off, 5:3:2
( P40,000)
Investment
Goodwill to old partners,
5:3:2 (sch. 2)
___20,000
Capital balances after
admission
P 375,000
MONA
LIZA
ALMA
LORNA
P150,000
P 50,000
80,000
__28,000
___12,000
_______
______
P178,000
P 62,000
P 80,000
(P 20,000)
(P 12,000) (
P8,000)
75,000
__10,000
____6,000
____4,000
______
P168,000
P 56,000
P 76,000
P 75,000
Schedule 2:
Total agreed capital (75,000/20%)
P 375,000
Total contributed capital (280,000+75,000)
80,000
Schedule 1:
Total agreed capital (80,000/25%)
P 320,000
Total capital contributed (200,000+80,000)
( 280,000)
Goodwill to old partners, 70:30
40,000
TOTAL
75,000
( 355,000)
Goodwill to old partners, 5:3:2
20,000
Partnership Dissolution Changes in Ownership
3-18:
TOTAL
Unadjusted capital balances
P320,000
Overvaluation of Marketable Securities
( 25,000)
Allowance for Bad Debts
( 25,000)
Adjusted capital balances before admission
P270,000
Total agreed capital (270,000/2/3)
Green's interest
Investment
3-19:
RED
WHITE
BLUE
P175,000
P100,000
P 45,000
( 12,500)
( 7,500)
( 5,000)
( 12,500)
( 7,500)
( 5,000)
P150,000
P 85,000
P 35,000
P405,000
1/3
P135,000
TOTAL
Capital balances before
admission
P720,000
Capital transfer
to WW (1/6)
______
Balances
P720,000
Equalization of capital
______
Balances
P720,000
Net profit, equally
12,600
Drawings (2 months)
_( 7,000)
Capital balances before
WWs Investment
P725,600
XX
YY
ZZ
WW
P360,000
P225,000
P135,000
( 60,000)
( 37,500)
( 22,500)
_120,000
P300,000
P187,500
P112,500
P120,000
( 100,000)
__12,500
__87,500
______
P200,000
P200,000
P200,000
P120,000
3,150
3,150
3,150
3,150
_( 1,500)
_( 2,000)
_( 1,500)
_( 2,000)
P201,650
P201,150
P201,650
P121,150
P906,675
1/3
P302,225
_121,150
3-20:
Cash to be invested
a
P181,075
Capital balances
P 45,000
Understatement of assets, P12,000
__6,000
Balances before settlement to A
P 51,000
Settlement to A
A's interest (23,750+5,000)
Partial Goodwill to A
A
P 20,750
B
P 19,250
__3,000
__3,000
P 23,750
P 22,250
P 30,250
_28,750
P 1,500
Therefore:
1. Under partial Goodwill method the capital balances of B is P 22,250
2. Under Bonus method the capital balances of B would be:
B, capital balances before settlement to A
P 22,250
Bonus to A (1,500X25/75)
_( 500)
B, capital after retirement of A
P 21,750
53
Chapter 3
3-21:
a
Perez
Suarez
Capital balances
P 200,000
Net income, P140,000
28,000
Undervaluation of inventory, P20,000
____4,000
Capital balances before settlement to Perez
P 232,000
Settlement to Perez
Bonus to Perez
_( 6,000)
Capital balances after retirement
P 226,000
3-22:
Reyes
P 100,000
P 150,000
70,000
42,000
___10,000
____6,000
P 180,000
P 198,000
( 195,000)
___15,000
_(
P 189,000
ELY
FLOR
P 320,000
P 192,000
9,000)
c
GLOR
Capital balances
P 128,000
Settlement to Ely
Total Goodwill (P40,000/50%)P80,000
___16,000
Capital balances after retirement of Ely
( 360,000)
__40,000 ___24,000
P
P 216,000
P 144,000
3-23:
c
Capital balance 3/1/011
Net loss-2011:
Salary (10 months)
Interest (10 months)
Bal. beg. cap. ratio: 48:24
Total
Capital balance
Drawings
Capital balance, 12/31/011
Net profit- 2012:
Salary
Interest
Balance, equally
Total
Capital balance
Drawings
Capital balance 12/31/12
_Alma_
480,000
_Betty_
240,000
480,000
40,000
( 544,000)
( 24,000)
456,000
( 24,000)
432,000
240,000
20,000
( 272,000)
( 12,000)
228,000
( 24,000)
204,000
720,000
60,000
( 816,000)
( 36,000)
684,000
( 48,000)
636,000
576,000
43,200
( 397,800)
221,400
653,400
( 24,000)
629,400
288,000
20,400
( 397,800)
( 89,400)
114,600
( 24,000)
90,600
864,000
63,600
( 795,600)
132,000
768,000
( 48,000)
720,000
_Total_
720,000
1,120,000
40%
448,000
400,000
48,000
3-24:
a
Capital balance, beg. 2013
2013 net profit (90,000 59,000):
Interest
Compensation
Balance, 4:6
Total
Balance
Withdrawal
Repairs (charge to Pete)
Capital balance, 12/31/013
_Pete_
P80,000
8,000
5,000
( 2,000)
11,000
91,000
( 8,000)
( 5,000)
78,000
_Carlos_
P30,000
_Total_
P110,000
3,000
20,000
( 3,000)
20,000
50,000
( 11,000)
39,000
11,000
25,000
( 5,000)
31,000
141,000
(19,000)
( 5,000)
117,000
P160,000
20%
32,000
43,000
11,000
Maria
P300,000
(25,000)
275,000
Ana
P1,500,000
(25,000)
1,475,000
6,250
40,000
11,250
332,500
(30,000)
302,500
31,250
11,250
1,517,500
(30,000)
1,487,500
37,500
40,000
22,500
1,850,000
(60,000)
1,790,000
8,312.5
48,000
33,450
392,262.5
37,937.5
22,300
1,547,737.5
46,250
48,000
55,750
1,940,000
276,000
668,262.5
184,000
1,731,737.5
Paz
-
800,000
800,000
Total
P1,800,000
(50,000)
1,750,000
800,000
460,000*
3,200,000
P3,200,000
2,740,000
P460,000
55
Chapter 3
3-25: Continued
3-26:
Maria
P668,262.5
(12,000)
656,262.5
Ana
P1,731,737.5
(12,000)
1,719,737.5
Paz
P800,000
(12,000)
788,000
Total
P3,200,000
(36,000)
3,164,000
16,707
12,000
15,300
P700,269.5
43,293
12,000
10,200
P1,785,230.5
20,000
12,000
8,500
P828,500
80,000
36,000
34,000
P3,314,000
P 280,000
224,000
P 56,000
c
Allocation of profits under the original partnerships agreement:
Amor
P30,000
12,000
10,000
P52,000
Salaries
Bonus to Amor*
Remaining profits
Total
Bea
P30,000
Cora
P40,000
4,000
P34,000
6,000
P46,000
Total
P100,000
12,000
20,000
P132,000
56
3-27, Continued
Salaries
Remaining profits (Sch. 1)
Bonus to Dina, (Sch. 2)
Total
Amor
P30,000
42,000
Bea
P30,000
14,000
Cora
P40,000
42,000
P72,000
P44,000
P82,000
Dina
P30,000
42,000
20,000
P92,000
Total
P130,000
140,000
20,000
P290,000
Sch. 1:
In order for Bea to increase his allocation by P10,000, she would need to received a P14,000 allocation
based on the profit ratio. Therefore, the total amount of profit subject to this allocation would be P140,000
(P14,000 / 10%).
Sch. 2:
If the cumulative total of income allocated before the bonus to Dina is P270,000, then Dina would be
entitled to the P20,000 bonus under the revised agreement.
3-28:
P80,000
56,000
P24,000
a.
Fair value of the original partnership:
Value of recorded net assets
Value of goodwill
Total fair value
P268,000
40,000
P308,000
P440,000
308,000
132,000
(90,000)
(20,000)
P
22,000
57
Chapter 3
3-30:
1. b
Net income per books
Adjustments:
Accrued expenses
Inventory overstated
Unrecorded purchases
Income received in advance
Supplies
Corrected net income
P50,000
2,400
(6,200)
(4,000)
3,000
1,800
P47,000
3.
4.
40%
P18,800
Computations:
Capital balances bef. Adm.
Admission of Olga
Bonus to Olga (Sch. 1)
Balances, 1/1/012
Division of profit
Balances, 12/31/012
Sale of interest of L to M
Division of profit
Drawings
Balances, 12/31/013
Division of profit
Inventory overvalued
Balances before retirement
Settlement to Mina
Total goodwill
Balances, 12/31/014
Lina
P150,000
Mina
P90,000
Nina
P60,000
Olga
(14,000)
136,000
18,800
154,800
(154,800)
8,400)
81,600
11,280
92,880
154,800
100,000
(20,000)
327,680
65,000
(5,000)
387,680
(425,360)
37,680
(5,600)
54,400
7,520
61,920
40,000
28,000
68,000
9,400
77,400
100,000
(10,000)
151,920
65,000
(5,000)
211,920
100,000
(5,000)
172,400
65,000
(5,000)
232,400
37,680
249,600
37,680
270,080
3-31:
Total
P340,000
40,000
340,000
47,000
387,000
300,000
(35,000)
652,000
195,000
(15,000)
832,000
(425,360)
113,040
P519,680
58
a
Partnership
Fair value of original partnership:
Assets at book value
Liabilities at book and fair value
(a) Book value of original partnership
assets appreciation (depreciation)
(b) Net assets
AA
BB
CC
P500,000
(369,500)
130,500
(50,000)
80,500
P600,000
(410,000)
190,000
125,000
315,000
P800,000
(558,000)
242,000
50,000
292,000
3-32:
30%
70%
25%
75%
20%
80%
P115,000
80,500
P420,000
315,000
P365.000
292,000
P34,500
P105,000
P73,000
1.a
2.a
3.b
4.b
Computations:
Maya
Rita
2010:
Balances, 1/1/10
Allocation of profit, sch. 1
Distributions
Balances, 12/31/10
P54,000
127,000
(100,000)
P81,600
P76,000
102,400
(100,000)
P78,400
2011:
Balances, 1/1/11
Admission of Hara *
Allocation of profit,sch. 1
Distributions
Balances, 12/31/11
P81,600
30,000
145,250
(80,000)
P176,850
P78,400
20,000
98,875
(80,000)
P117,275
Hara
Perla
Total
P130,000
230,000
(200,000)
P160,000
P 70,000
85,875
(80,000)
P 75,875
59
P160,000
120,000
330,000
(240,000)
P370,000
Chapter 3
3-32, Continued
2012:
Balances, 1/1/012
Sale of interest to Rita
Allocation of profit, sch. 1
Distributions
Balances, 12/31/012
2013:
Balances, 1/1/013
Adjustment of net assets
Maya
Rita
Hara
P176,850
(176,850)
P
-
P117,272
176,850
100,000
(60,000)
P334,125
P75,875
100,000
(80,000)
P95,875
P334,125
(5,000)
P95,875
(5,000)
Perla
Total
P370,000
200,000
(140,000)
P430,000
P430,000
(10,000)
Recognition of goodwill**
Sale of interest by Rita
Subtotal
Admission of Perla***
Balances, 12/31/013
20,875
(350,000)
P
-
P90,875
21,625
P112,500
75,000
P 75,000
20,875
(350,000)
P90,875
96,625
P187,500
Schedule 1:
2010 Allocation of profit:
Maya
40%
P80,000
46,000
1,600
P127,600
Rita
60%
P100,000
2,400
P102,400
Total
P180,000
46,000
4,000
P230,000
2011Allocation of profit:
Profit and loss ratio
Salary
Bonus (see schedule 2)
Balance
Total
Maya
30%
P80,000
66,000
(750)
P145,250
Schedule 2:
2010 Bonus:
Maya (P230,000 x 20%)
20011Bonus:
Maya (P330,000 x 20%)
Hara (P330,000 x 20%)
Rita
45%
P100,000
(1,125)
P98,875
Hara
25%
P70,000
16,500
(625)
P85,875
Total
P250,000
82,500
(2,500)
P330,000
P46,000
P66,000
16,500
P82,500
P280,000
230,000
P 50,000
P350,000
329,125
P 20,875
P187,500
165,875
P 21,625
61
Chapter 3
SOLUTIONS TO PROBLEMS
(a)
Problem 3 1
1. Revaluation of Assets:
Total agreed capital (P75,000 25%).....................................P300,000
Total contributed capital........................................................ ._275,000
Upward revaluation of assets, P/L ratio..................................P 25,000
Entry
Assets................................................................................
Cash.................................................................................
Red, capital..................................................................
White, capital...............................................................
25,000
75,000
5,000
10,000
Blue, capital.................................................................
Green, capital...............................................................
10,000
75,000
2. Bonus Method:
Contributed capital of Green....................................................P 75,000
Agreed capital of Green (P275,000 x 25%).............................._68,750
Bonus to old partners, P/L ratio...............................................P 6,250
Entry:
Cash.................................................................................
Green, capital...............................................................
Red, capital..................................................................
White, capital...............................................................
Blue, capital.................................................................
75,000
68,750
1,250
2,500
2,500
100,000
20,000
40,000
40,000
20,000
30,000
25,000
15,000
20,000
15,000
75,000
50,000
Problem 3 2
a.
P700,000
_640,000
P140,000
_128,000
P 12,000
TOTAL
P500,000
_140,000
P640,000
P 60,000
TOMAS
P
_140,000
P140,000
TOTAL
P500,000
_200,000
P700,000
BRUNO
P245,000
( 36,000)
P209,000
BRUNO
P245,000
( 24,000)
P221,000
MARIO
P315,000
( 12,000)
P303,000
MARIO
P315,000
( 24,000)
P291,000
TOMAS
TOTAL
P140,000
P700,000
( 12,000) ( 60,000)
P128,000
P640,000
TOMAS
TOTAL
P140,000
P700,000
( 12,000) ( 60,000)
P128,000
P640,000
Problem 3 3
a.
b.
P180,000
_140,000
P 40,000
P240,000
_180,000
P 60,000
P120,000
_140,000
P 20,000
P 40,000
__20,000
P 20,000
Chapter 3
63
Problem 3 4
a.
60,000
100,000
80,000
20,000
60,000
b.
Cash.................................................................................................
Ellen, capital...............................................................................
60,000
60,000
No Goodwill, no bonus because the total agreed capital is equal to the total contributed
capital.
c.
d.
Gene, capital.....................................................................................
Nancy, capital....................................................................................
Ellen, capital...............................................................................
20,000
Cash.................................................................................................
Ellen, capital...............................................................................
32,000
8,000
28,000
32,000
Since the total agreed capital (P172,000) is equal to the total contributed capital (P172,000),
then no Goodwill or bonus is to be recorded.
e.
32,000
3,000
35,000
Problem 3 5
a.
b.
Cash.................................................................................................
Cherry capital.............................................................................
40,000
40,000
Entry:
Cash. ..........................................................................................
Cherry, capital......................................................................
Helen, capital........................................................................
Cathy, capital........................................................................
c.
50,000
42,500
5,250
2,250
Entry:
Cash. ..........................................................................................
Helen, capital..............................................................................
Cathy, capital..............................................................................
Cherry, capital......................................................................
d.
36,250
e.
25,000
7,875
3,375
50,000
30,000
50,000
21,000
9,000
25,000
15,000
40,000
Problem 3 6
a.
P800,000
_____1/4
P200,000
b.
P840,000
_____1/4
P210,000
65
Problem 3-6, continued:
c.
d.
e.
Chapter 3
P832,000
_600,000
P232,000
P800,000
__10,000
Contributed capital........................................................................................................................
Contributed capital of old partners................................................................................................
790,000
_600,000
P190,000
P820,000
_600,000
P220,000
Problem 3 7
a.
b.
c.
Tony, capital
........................................................................................................
Noel, capital......................................................................................................
40,000
Cash
........................................................................................................
Noel, capital......................................................................................................
(P180,000 2/3) x 1/3 = P90,000.
90,000
Cash.........................................................................................................................
Goodwill...................................................................................................................
Noel, capital......................................................................................................
56,000
4,000
40,000
90,000
60,000
Subas, capital
...............
Tony, capital
..............
Inventory........................
24,000
14,400
9,600
Cash.........................................................................................................................
52,000
Noel, capital......................................................................................................
52,000
Total agreed capital (P52,000 1/4)...............................................................................P208,000
Total capital before inventory write-down (180,000 + 52,000)......................................(232,000)
e.
55,200
36,800
68,000
f.
Cash.................................................................................................
Subas, capital....................................................................................
Tony, capital .....................................................................................
Noel, capital................................................................................
40,000
2,400
1,600
Cash................................................................................................. P60,000
44,000
Goodwill. ..........................................................................................
Noel, capital................................................................................
Subas, capital (P60,000 x 3/5)....................................................
Tony, capital (P60,000 x 2/5).......................................................
60,000
P 60,000
36,000
24,000
b.
c.
Conny, capital....................................................................................
Andy, capital (P8,000 x 3/4)..............................................................
Benny, capital (P8,000 x 1/4).............................................................
Cash. ..........................................................................................
40,000
6,000
2,000
Goodwill. ..........................................................................................
Conny, capital....................................................................................
Cash. ..........................................................................................
10,000
40,000
25,000
40,000
48,000
50,000
15,000
5,000
45,000
Problem 3 9
a.
b.
Spade, capital....................................................................................
Jack, capital................................................................................
120,000
60,000
150,000
120,000
12,000
18,000
30,000
150,000
67
Chapter 3
c.
Spade, capital....................................................................................
Cash. ..........................................................................................
180,000
24,000
36,000
180,000
60,000
d.
e.
f.
g.
Land.................................................................................................
Ace, capital (20%).......................................................................
Jack, capital (30%).....................................................................
Spade, capital (50%)...................................................................
20,000
Spade, capital....................................................................................
Ace, capital (P50,000 x .40)..............................................................
Jack, capital (P50,000 x .60).............................................................
Cash. ..........................................................................................
Land. ..........................................................................................
130,000
20,000
30,000
Goodwill. ..........................................................................................
Spade, capital....................................................................................
Cash. ..........................................................................................
30,000
120,000
60,000
120,000
4,000
6,000
10,000
60,000
120,000
150,000
12,000
18,000
150,000
Land................................................................................................. P40,000
Ace, capital (20%).......................................................................
Jack, capital (30%).....................................................................
Spade, capital (50%)...................................................................
Spade, capital (P120,000 + P20,000)................................................
Ace, capital (P10,000 x 40%)............................................................
Jack, capital (P10,000 x 60%)...........................................................
Land. ..........................................................................................
Note payable...............................................................................
8,000
12,000
20,000
140,000
4,000
6,000
100,000
50,000
Problem 3 10
Case 1: Bonus of P10,000 to Eddy:
Eddy, capital...............................................................................
Charly, capital (P10,000 x 3/5)...................................................
Danny, capital (P10,000 x 2/5)....................................................
Cash .....................................................................................
Case 2: Partial Goodwill to Eddy:
70,000
6,000
4,000
80,000
Goodwill.....................................................................................
Eddy, capital...............................................................................
Cash .....................................................................................
Case 3: Bonus of P5,000 to remaining partner:
Eddy, capital...............................................................................
Charly, capital (P5,000 x 3/5)...............................................
Danny, capital (P5,000 x 2/5)...............................................
Cash .....................................................................................
Case 4: Total Implied Goodwill of P24,000:
Goodwill.....................................................................................
Eddy, capital...............................................................................
Charly, capital (P24,000 x 3/6).............................................
Danny, capital (P24,000 x 2/6).............................................
Cash .....................................................................................
Case 5: Other assets disbursed:
Eddy, capital...............................................................................
Other assets.................................................................................
Charly, capital (P60,000 x 3/6).............................................
Danny, capital (P60,000 x 2/6).............................................
Cash .....................................................................................
Case 6: Danny purchases Eddy's capital interest:
Eddy, capital...............................................................................
Danny, capital.......................................................................
4,000
70,000
74,000
70,000
3,000
2,000
65,000
24,000
70,000
12,000
8,000
74,000
70,000
20,000
30,000
20,000
40,000
70,000
70,000
69
Chapter 3
Problem 3 11
a. 1/1/10
Building...............................................................
Equipment............................................................
Cash ....................................................................
Santos capital..............................................
To record initial investment.
52,000
16,000
12,000
12/31/10Reyes capital.........................................................
Santos capital..............................................
22,000
40,000
12,000
Income summary.........................................
To record distribution of loss as follows:
1/1/11
10,000
Interest.................................................................
Additional profit..................................................
Balance to Reyes.................................................
Santos
P 8,000
4,000
______
Reyes
P
(22,000)
Total
P 8,000
4,000
(22,000
Total ....................................................................
P12,000
P(22,000)
(P10,000)
Cash ....................................................................
Santos capital (15%)...........................................
Reyes capital (85%).............................................
Cruz capital.................................................
15,000
300
1,700
17,000
(new investment by Cruz brings total capital to P85,000 after 2006 loss [80,000
10,000 + 15,000]. Cruz's 20% interest is P17,000 [85,000 x 20%] with the extra
P2,000 coming from the two original partners [allocated between them according
to their profit and loss ratio].)
12/31/11Santos capital.......................................................
Reyes capital........................................................
Cruz capital.........................................................
Santos drawings..........................................
Reyes drawings...........................................
Cruz drawings.............................................
10,340
5,000
5,000
10,340
5,000
5,000
To close drawings accounts for the year based on distributing 20%. Of each
partner's beginning capital balances [after adjustment for Cruz's investment] or
P5,000 whichever is greater. Santos's capital Is P51,700 [40,000 + 12,000 300].)
12/31/11 Income summary..................................................
Santos capital..............................................
Reyes capital...............................................
Cruz capital.................................................
To allocate P44,000 income figure as computed below:
Santos
Interest (20% of P51,700).................................... P10,340
15% of P44,000 income.......................................
6,600
Balance, 60:40..................................................... ______
44,000
Reyes
Cruz
P16,236
P10,824
Total ....................................................................
P16,940
P16,236
P10,824
Santos
P40,000
12,000
(300)
(10,340)
_16,940
Reyes
P40,000
(22,000)
(1,700)
(5,000)
_16,236
Capital, 12/31/11..................................................
P58,300
P27,536
16,940
16,236
10,824
22,824
22,824
12/31/012
Santos capital......................................................
11,660
Reyes capital........................................................
5,507
Diaz capital.........................................................
5,000
Santos drawings..........................................
11,660
Reyes drawings...........................................
5,507
Diaz drawings.............................................
5,000
To close drawings accounts based on 20% of beginning capital Balances (above) or
P5,000 (whichever is greater).
12/31/012
Income summary..................................................
Santos capital..............................................
Reyes capital...............................................
Diaz capital.................................................
To distribute profit for 2012 computed as follows:
61,000
20,810
24,114
16,076
Santos
P11,660
9,150
______
Reyes
Diaz
P24,114
P16,076
Total ....................................................................
P20,810
P24,114
P16,076
Building...............................................................
Equipment............................................................
Cash ....................................................................
Goodwill..............................................................
Santos capital..............................................
Reyes capital...............................................
To record initial investments. Reyes is credited with goodwill of
Santos investment.
52,000
16,000
12,000
80,000
80,000
80,000
P80,000 to match
71
Chapter 3
12/31/19
1/1/11
Reyes capital........................................................
30,000
Santos capital..............................................
20,000
Income summary.........................................
10,000
Interest of P16,000 is credited to Santos (P80,000 x 20%) along with a base of
P4,000. The remaining profit is now a P30,000 loss which is attributed entirely to
Reyes.
Cash ....................................................................
15,000
Goodwill..............................................................
22,500
Cruz capital.................................................
37,500
Cash and goodwill contributed by Cruz are recorded. Goodwill is Computed
algebraically as follows:
P15,000 + goodwill =
P15,000 + goodwill =
P15,000 + goodwill =
.80 goodwill
=
goodwill
=
20,000
10,000
7,500
44,000
26,600
10,400
6,960
Santos
P20,000
6,600
______
Reyes
Cruz
P10,440
P 6,960
Total ....................................................................
P26,600
P10,440
P 6,960
Reyes
P80,000
(30,000)
P50,440
(10,000)
_10,440
Cruz
P37,500
(7,500)
__6,960
P36,960
1/1/012
Cruz capital..................................................................
Diaz capital.........................................................
To transfer of capital purchase.
46,000
12/31/012Santos capital................................................................
Reyes capital................................................................
Diaz capital..................................................................
Santos drawings..................................................
Reyes drawings...................................................
Diaz drawings.....................................................
To close drawings accounts based on 20% of beginning capitals.
22,118
12,800
9,200
61,000
46,000
22,118
12,800
9,200
31,268
12,800
9,200
Santos
P22,118
9,150
______
Reyes
Diaz
P17,839
P11,893
Totals............................................................................
P31,268
P17,839
P11,893
Santos
P106,600
3,988
Reyes
P50,440
13,560
Diaz
(22,118)
__31,268
(12,800)
_17,839
P119,738
P69,039
1/1/013
73
P46,000
(9,200)
_11,893
P48,693
Goodwill.......................................................................
14,321
Santos capital......................................................
2,148
Reyes capital.......................................................
7,304
Diaz capital.........................................................
4,869
To record implied goodwill. Diaz will be paid P53,562 (110% of the capital balance for his
interest. This amount is P4,869 in excess of the capital account. Since Diaz is only entitled
to a 34% share of profits and losses, the additional P4,869 must indicate that the partnership
as a whole is undervalued by P14,321 (P4,869/34%) which is treated as goodwill.
Diaz capital..................................................................
53,562
Cash....................................................................
53,562
To record settlement to Diaz.
Chapter 3
Problem 3 12
Partnership Books Continued as Books of Corporation
Entries in the Books of the Corporation
(1) Inventories..........................................................................................
Land ...................................................................................................
Building. .............................................................................................
Accumulated depreciation bldg.........................................................
26,000
40,000
20,000
20,000
30,000
4,000
18,000
100,000
75,000
75,000
20,000
58,000
34,800
23,200
20,200
1,800
250,000
26,000
40,000
20,000
20,000
30,000
4,000
18,000
20,000
58,000
34,800
23,200
20,200
1,800
250,000
30,000
40,000
44,000
26,000
60,000
60,000
70,000
60,000
100,000
75,000
75,000
250,000
44,000
26,000
60,000
60,000
70,000
60,000
30,000
40,000
250,000
Problem 3 13
1.
a.
Bonus Method
2012 journal entries
Jan. 1: Cash
Inventory
Equipment
Notes payable
Aquino, capital (50%)
Binay, capital (50%)
To record initial investments at fair value along with equal
capital balances.
40,000
12,000
48,000
10,000
45,000
45,000
75
Chapter 3
12,000
Aquino, capital
To record additional investment of Aquino.
Dec. 31: Computation of the bonus:
Net profit before bonus
Net profit after bonus (P33,000 / 110%)
Bonus
12,000
P33,000
30,000
P 3,000
P405,000
171,000
P576,000
P 48,000
10%
P 4,800
P45,000 x 10% =
P 4,500
Binay:
Bonus
Interest
Balance of income
Total
Aquino
P 3,000
4,800
12,420
P20,220
Closing Entry:
Aquino, Capital
Binay, capital
Aquino, drawing
Binay, drawing
To close P800 per month drawing accounts for the year.
Income summary
Aquino, capital
Binay, capital
To close profit for the year.
Binay
P4,500
8,280
P12,780
Total
P 3,000
9,300
20,700
P33,000
9,600
9,600
9,600
9,600
33,000
20,220
12,780
76
Aquino
P45,000
12,000
20,220
(9,600)
P67,620
Binay
P45,000
12,780
(9,600)
P48,180
Total
P 90,000
12,000
33,000
(19,200)
P115,800
P181,800
1/3
P 60,600
66,000
P 5,400
66,000
Roxas, capital
Aquino, capital
Binay, capital
To record admission of Roxas with bonus to original partners.
60,600
3,240
2,160
Goodwill Method:
2012 Journal Entries:
Jan. 1: Cash
Inventory
Equipment
Goodwill
Note payable
Aquino, capital
Binay, capital
To record investments of the partners with goodwill
attributed to Aquino.
P78,000
90,000
P12,000
78,000
6,000
6,000
90,000
40,000
12,000
48,000
14,000
10,000
52,000
52,000
77
Chapter 3
12,000
Aquino, capital
To record additional investment of Aquino.
De. 31: Bonus to Aquino (the same)
Interest on average capital:
12,000
P3,000
P52,000 x 9/12 =
P64,000 x 3/12 =
P39,000
16,000
P55,000
x 10%
P 5,500
Binay:
P 5,200
P52,000 x 10%
Bonus
Interest
Balance of income
Total
Aquino
P 3,000
5,500
11,580
P20,080
Closing Entries:
Aquino, Capital
Binay, capital
Aquino, drawing
Binay, drawing
To close out drawing accounts for the year.
Total
P 3,000
10,200
19,300
P33,000
9,600
9,600
9,600
9,600
Income summary
Aquino, capital
Binay, capital
To allocate profits computed above.
b.
Binay
P5,200
7,720
P12,920
33,000
20,080
12,920
Aquino
P52,000
12,000
20,080
(9,600)
P74,480
Binay
P52,000
12,920
(9,600)
P55,320
Total
P104,000
12,000
33,000
(19,200)
P129,800
78
P198,000
195,800
P 2,200
2,200
1,320
880
66,000
Roxas, capital
To record admission of Roxas.
Several: Withdrawal of Binay
Years Binay capital balance
Later: Settlement
Goodwill to Binay (20%)
66,000
P78,000
90,000
P12,000
P60,000
Goodwill
Aquino, capital (40%)
Binay, capital (20%)
Roxas, capital (20%)
To recognize total goodwill.
60,000
Binay, capital
Cash
To record cash settlement to Binay.
90,000
24,000
12,000
12,000
90,000