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    Partnership Dissolution Problems

    Uploaded by

    Mellanie Serrano
    The document discusses various cases of admitting a new partner, Paolo, to the existing KitaKita partnership through either Paolo purchasing an interest from the existing partners Alex and Empoy, or through Paolo investing new capital. In each case, the capital accounts and profit/loss ratios of the partners are adjusted based on the terms of Paolo's admission. Journal entries are required to record the transactions and recalculate the partners' ownership percentages. The cases consider different amounts purchased/invested by Paolo, as well as scenarios where partnership assets are revalued or goodwill is involved.

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    Partnership Dissolution Problems

    Uploaded by

    Mellanie Serrano
    376 views2 pages
    The document discusses various cases of admitting a new partner, Paolo, to the existing KitaKita partnership through either Paolo purchasing an interest from the existing partners Alex and Empoy, or through Paolo investing new capital. In each case, the capital accounts and profit/loss ratios of the partners are adjusted based on the terms of Paolo's admission. Journal entries are required to record the transactions and recalculate the partners' ownership percentages. The cases consider different amounts purchased/invested by Paolo, as well as scenarios where partnership assets are revalued or goodwill is involved.

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    The document discusses various cases of admitting a new partner, Paolo, to the existing KitaKita partnership through either Paolo purchasing an interest from the existing partners Alex and Empoy, or through Paolo investing new capital. In each case, the capital accounts and profit/loss ratios of the partners are adjusted based on the terms of Paolo's admission. Journal entries are required to record the transactions and recalculate the partners' ownership percentages. The cases consider different amounts purchased/invested by Paolo, as well as scenarios where partnership assets are revalued or goodwill is involved.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    376 views2 pages

    Partnership Dissolution Problems

    Uploaded by

    Mellanie Serrano
    The document discusses various cases of admitting a new partner, Paolo, to the existing KitaKita partnership through either Paolo purchasing an interest from the existing partners Alex and Empoy, or through Paolo investing new capital. In each case, the capital accounts and profit/loss ratios of the partners are adjusted based on the terms of Paolo's admission. Journal entries are required to record the transactions and recalculate the partners' ownership percentages. The cases consider different amounts purchased/invested by Paolo, as well as scenarios where partnership assets are revalued or goodwill is involved.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    Admission of new partner through purchase of interest

    Capital balances and profit and loss ratios of partners in KitaKita Partnership as of December 01,
    2020 are summarized as follows:

    Capital Accounts P/L ratios


    Alex, Capital P500,000 70%
    Empoy, Capital P300,000 30%

    In the cases that follow, provide the necessary journal entries and compute for the revised
    profit or loss sharing agreement after the dissolution.

    Case 1: Purchase of interest from one partner


    On December 1, 2020, Paolo was admitted to the partnership when he purchased one-half of
    Alex's interest in the partnership for P300,000. The net assets of the firm as of this date
    approximate their fair values.

    Case 2: Purchase of interest from all partners


    On December 1, 2020, Paolo was admitted to the partnership when he purchased one-half of
    Alex and Empoy’s interest in the partnership for consideration of P300,000 and P100,000,
    respectively. The net assets of the firm as of this date approximate their fair values.

    Case 3: Purchase of interest from all partners after asset revaluation


    On December 1, 2020, Paolo was admitted to the partnership when he purchased one-half of
    Alex and Empoy’s interest in the partnership for consideration of P320,000 and P180,000,
    respectively. The partnership’s recorded land is undervalued.

    Case 4: Purchase of interest from one partner and goodwill is awarded to incoming partner
    On December 1, 2020, Paolo was admitted to the partnership when he purchased one-half of
    Alex’s interest in the partnership for consideration of P250,000. The partnership decided to
    recognize goodwill for Paolo in the amount of P50,000.

    Case 5: Purchase of interest from one partner and goodwill is awarded to old partners
    On December 1, 2020, Paolo was admitted to the partnership when he purchased one-half of
    Alex’s interest in the partnership for consideration of P267,500. The partnership decided to
    recognize goodwill for Alex and Empoy.
    Admission of new partner through investment

    Capital balances and profit and loss ratios of partners in KitaKita Partnership as of December 01,
    2020 are summarized as follows:

    Capital Accounts P/L ratios


    Alex, Capital P500,000 70%
    Empoy, Capital P300,000 30%

    In the cases that follow, provide the necessary journal entries and compute for the revised
    profit or loss sharing agreement after the dissolution.

    Case 1:
    On December 1, 2020, Paolo was admitted to the partnership when he invested P200,000 cash.
    He will be credited 20% interest in the partnership as the result of his investment. The net assets
    of the firm as of this date approximate their fair values.

    Case 2:
    On December 1, 2020, Paolo was admitted to the partnership when he invested P200,000 cash.
    He will be credited 10% interest in the partnership as the result of his investment. The net assets
    of the firm as of this date approximate their fair values.

    Case 3:
    On December 1, 2020, Paolo was admitted to the partnership when he invested P200,000 cash.
    He will be credited 30% interest in the partnership as the result of his investment. The net assets
    of the firm as of this date approximate their fair values.

    Case 4:
    On December 1, 2020, Paolo was admitted to the partnership when he invested P500,000 cash.
    He will be credited 1/3 interest in the partnership as the result of his investment. Also Alex and
    Empoy agreed to revalue the building before Paolo’s admission.

    Case 5:
    On December 1, 2020, Paolo was admitted to the partnership when he invested P300,000 cash.
    He will be credited 25% interest in the partnership as the result of his investment. Also Alex and
    Empoy agreed to recognize goodwill.

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