PARTNERSHIP

DISSOLUTION
Change in the relation of the partners caused by any
partner ceasing to be associated in the carrying out of
the business.- Article 1825 of the Civil Code

CAUSES OF DISSOLUTION
Admission of a new partner
Retirement of a partner
Death, incapacity, or bankruptcy of a partner
Incorporation of a partnership
ADMISSION OF A NEW
PARTNER
DAVID MARY MARTHA
ADMISSION OF A NEW PARTNER -
ADDITION TO THE GROUP
DAVID MARY MARTHA
ADMISSION OF A NEW PARTNER -
ADDITION TO THE GROUP
DAVID MARY MARTHA
ADMISSION OF A NEW PARTNER -
REPLACEMENT OF A PARTNER
DAVID MARY MARTHA

REMOVAL OF A PARTNER

REMOVAL OF A PARTNER

WHEN A DISSOLUTION OCCURS, WILL THE
BUSINESS SHUT DOWN?

NOT NECESSARILY
SHUTTING DOWN OF THE BUSINESS IS CALLED
LIQUIDATION
Consequnces of
dissolution
ADMISSION OF A NEW
PARTNER
PURCHASE OF ONE OR MORE OF THE
ORIGINAL PARTNERS
INVESTMENT OR ASSET
CONTRIBUTIONS TO THE PARTNERSHIP
PURCHASE OF INTEREST
April, Bert and Carl who share earnings in a 3:3:4 ratio
have capital balances of P440,000 and P560,000 and
P380,000
Dana Purchases 25% interest of Carl for P95,000.
Carl, capital 95,000
Dana , capital 95,000
Dana purchases 25% interest of Carl
Carl, capital 380,000
x .25
Purchased by Dana 95,000
Dana acquires 30% interest of April for P125,000
April, capital 132,000
Dana , capital 132,000
Dana purchases 30% interest of April
April, capital 440,000
x .30
Dana, capital 132,000
Dana purchases 40% of each of Aprils and Berts interest by
paying P320,000 and P200,000 respectively.
Bart, capital 224,000
April, capital 176,000
Dana , capital 400,000
Dana purchases 40% of each of April's and Bert's interest
40%
April, capital 440,000 176,000
Bart, capital 560,000 224,000
400,000


April, capital 88,000
Bart, capital 112,000
Carl, capital 76,000
Dana, capital 276,000
Dana purchases 1/5 of the partners' interest for P300,000
with a check for P200,000 and a 30 day promissory note for the balance.
1/5
April 440,000 88,000
Bart 560,000 112,000
Carl 380,000 76,000


April, capital 178,150
Bart, capital 220,150
Carl, capital 165,200
Dana, capital 563,500
Revaluation of non-cash assets:
New value 1,880,000
Old value 1,650,000
Adjustment 230,000
Unadjusted Adjusted
Capital Adjustment Capital
April 440,000 69,000 509,000
Bert 560,000 69,000 629,000
Carl 380,000 92,000 472,000
Non-cash assets 230,000
April, capital 69,000
Bert, capital 69,000
Carl, capital 92,000
ADMISSION OF NEW
PARTNER BY INVESTMENT
DETERMINE THE TOTAL AGREED
CAPITALIZATION
DETERMINE THE CAPITAL CREDIT OF THE NEW
PARTNER
IF THE CAPITAL CREDIT OF THE NEW PARTNER
IS EQUAL TO HIS INVESTMENT, THERE IS NO
BONUS
ADMISSION OF NEW
PARTNER BY INVESTMENT
IF THE CAPITAL CREDIT OF THE NEW PARTNER
IS LOWER THAN HIS INVESTMENT, BONUS IS TO
THE OLD PARTNERS

IF THE CAPITAL CREDIT OF THE NEW PARTNER
IS HIGHER THAN HIS INVESTMENT, BONUS IS TO
NEW PARTNER


TOTAL AGREED CAPITALIZATION P 600,000
GENE'S INTEREST 1/6
GENE'S CAPITAL CREDIT 100,000
GENE'S INVESTMENT 100,000
BONUS P -
CASH 100,000
GENE, CAPITAL 100,000
Gene is admitted to the partnership
by investing P100,000.


TOTAL AGREED CAPITALIZATION P 660,000
GENE'S INTEREST 20%
GENE'S CAPITAL CREDIT 132,000
GENE'S INVESTMENT 160,000
BONUS to the old partners P (28,000)
DISTRIBUTION OF BONUS TO OLD PARTNERS:
EVITA P28,000 X .40 p 11,200
FARIDA P28.000 x .60 16,800
p 28,000
CASH 160,000
GENE, CAPITAL 132,000
EVITA, CAPITAL 11,200
FARIDA, CAPITAL 16,800
Gene is admitted to the
partnership by investing


TOTAL AGREED CAPITALIZATION P 690,000
GENE'S INTEREST 1/3
GENE'S CAPITAL CREDIT 230,000
GENE'S INVESTMENT 190,000
BONUS to the new partner P 40,000
DISTRIBUTION OF BONUS TO GENE:
EVITA P40,000 x.4 p 16,000
FARIDA P40,000 x .60 24,000
p 40,000
CASH 190,000
EVITA, CAPITAL 16,000
FARIDA, CAPITAL 24,000
GENE, CAPITAL 230,000
Gene is admitted to the
partnership by investing


GENE'S CAPITAL CREDIT 210,000
GENE'S INVESTMENT 200,000
BONUS to the new partner P 10,000
DISTRIBUTION OF BONUS TO GENE:
EVITA P10,000 x.4 p 4,000
FARIDA P10,000 x .60 6,000
p 10,000
CASH 200,000
EVITA, CAPITAL 4,000
FARIDA, CAPITAL 6,000
GENE, CAPITAL 210,000
Gene is admitted to the
partnership by investing
P190,000. Bonus is
granted to him.


Revaluation of Assets:
Unadjusted Adjusted
Capital Adjustment Capital
Evita 280,000 40,000 320,000
Farida 220,000 60,000 280,000
600,000
Gene's contribution:
Cash 50,000
Equipment 100,000 150,000
Total contribution 750,000
TOTAL AGREED CAPITALIZATION P 750,000
GENE'S INTEREST 1/5
GENE'S CAPITAL CREDIT 150,000
GENE'S INVESTMENT 150,000
BONUS P 0
CASH 50,000
Office equipment 100,000
Gene, capital 150000


TOTAL AGREED CAPITALIZATION P 900,000
KAILA'S INTEREST 15%
KAILA'S CAPITAL CREDIT 135,000
KAILA'S INVESTMENT 200,000
BONUS to the OLD PARTNERS P (65,000)
DISTRIBUTION OF BONUS
HANNAH 65,000 X 2/10 P 13,000
ISABEL 65,000 X 3/10 19,500
JAY 65,000 X 5/10 32,500
P 65,000
CASH 200,000
HANNAH, CAPITAL 13,000
ISABEL, CAPITAL 19,500
JAY CAPITAL 32,500
KAILA, CAPITAL 135,000


TOTAL AGREED CAPITALIZATION P 850,000
KAILA'S INTEREST 20%
KAILA'S CAPITAL CREDIT 170,000
KAILA'S INVESTMENT 150,000
BONUS to the NEW PARTNER P 20,000
DISTRIBUTION OF BONUS
HANNAH 20,000 X 2/10 P 4,000
ISABEL 20,000 X 3/10 6,000
JAY 20,000 X 5/10 10,000
P 20,000
CASH 150,000
HANNAH, CAPITAL 4,000
ISABEL, CAPITAL 6,000
JAY CAPITAL 10,000
KAILA, CAPITAL 170,000
Kaila is admitted to the


TOTAL AGREED CAPITALIZATION P 900,000
KAILA'S INTEREST 18%
KAILA'S CAPITAL CREDIT 162,000
KAILA'S INVESTMENT 200,000
BONUS to the OLD PARTNERS P (38,000)
DISTRIBUTION OF BONUS
HANNAH 38,000 X 2/10 P 7,600
ISABEL 38,000 X 3/10 11,400
JAY 38,000 X 5/10 19,000
P 38,000
CASH 200,000
HANNAH, CAPITAL 7,000
ISABEL, CAPITAL 11,400
JAY CAPITAL 19,000
KAILA, CAPITAL 162,000
Kaila is admitted to the


TOTAL AGREED CAPITALIZATION P 1,000,000
KAILA'S INTEREST 35%
KAILA'S CAPITAL CREDIT 350,000
KAILA'S INVESTMENT 300,000
BONUS to the NEW PARTNER P 50,000
DISTRIBUTION OF BONUS
HANNAH 50,000 X 2/10 P 10,000
ISABEL 50,000 X 3/10 15,000
JAY 50,000 X 5/10 25,000
P 50,000
CASH 300,000
HANNAH, CAPITAL 10,000
ISABEL, CAPITAL 15,000
JAY, CAPITAL 25,000
KAILA, CAPITAL 350,000
Kaila is admitted to the


TOTAL AGREED CAPITALIZATION P 600,000
NOREEN'S INTEREST 1/3
NOREEN'S CAPITAL CREDIT 200,000
NOREEN'S INVESTMENT 100,000
BONUS to the NEW PARTNER P 100,000
DISTRIBUTION OF BONUS
LORINA 100,000 X 70% P 70,000
MARGIE 100,000 X 30% 30,000
P 100,000
CASH 100,000
LORINA, CAPITAL 70,000
MARGIE, CAPITAL 30,000
NOREEN, CAPITAL 200,000
Noreen is admitted to the
partnership


TOTAL AGREED CAPITALIZATION P 800,000
NOREEN'S INTEREST 20%
NOREEN'S CAPITAL CREDIT 160,000
NOREEN'S INVESTMENT 300,000
BONUS to the OLD PARTNERS P (140,000)
DISTRIBUTION OF BONUS
LORINA 140,000 X 70% P 98,000
MARGIE 140,000 X 30% 42,000
P 140,000
CASH 300,000
LORINA, CAPITAL 98,000
MARGIE, CAPITAL 42,000
NOREEN, CAPITAL 160,000
Noreen is admitted to the
partnership


TOTAL AGREED CAPITALIZATION P 800,000
NOREEN'S INTEREST 35%
NOREEN'S CAPITAL CREDIT 280,000
NOREEN'S INVESTMENT 300,000
BONUS to the OLD PARTNERS (20,000)
DISTRIBUTION OF BONUS
LORINA 20,000 X 70% 14,000
MARGIE 20,000 X 30% 6,000
20,000
CASH 300,000
LORINA, CAPITAL 14,000
MARGIE, CAPITAL 6,000
NOREEN, CAPITAL 280000
Noreen is admitted to the
partnership
WITHDRAWAL OF A
PARTNER
THE WITHDRAWING PARTNERS INTEREST MAY
BE PURCHASED BY THE REMAINING PARTNERS
THE WITHDRAWING PARTNERS INTEREST MAY
BE PURCHASED BYA NEW PARTNER.
THE PARTNERSHIP OR THE FIRM MAY PAY THE
WITHDRAWING PARTNER
A. Pamela, capital 240,000
Rixy, capital 240,000
B Pamela, capital 240,000
Olga, capital 240,000
c Pamela, capital 240,000
Remy, capital 60,000
Rosie, capital 180,000
D Pamela, capital 240,000
Olga, capital 96,000
Quinee, capital 144,000
E Pamela, capital 240,000
Olga, capital 16,000
Quinee, capital 24,000
Cash 200,000
Note payable 80,000
Pamela's capital balance 240,000
Payment to Pamela 280,000
Bonus from remaining partners (40,000)
F Pamela, capital 240,000
Olga, capital 16,000
Quinee, capital 24,000
Land 150,000
Inventories 50,000
Pamela's capital balance 240,000
Payment to Pamela 200,000
Bonus to remaining partners 40,000