Reference no: EM133140152
Question - PARTNERSHIP DISSOLUTION - M and N admits O as a new partner. The partnership statement of financial position immediately before the admission of C is shown below:
|
Cash
|
28,000
|
Accounts Payable
|
65,000
|
|
Accounts Receivable
|
118,000
|
M, Capital (70%)
|
172,000
|
|
Inventory
|
187,000
|
N, Capital (30%)
|
96,000
|
|
Total Assets
|
333,000
|
Total Liabilities & Equity
|
333,000
|
The following adjustments are determined:
a. The recoverable amount of the account receivable is P117,401.
b. A P30,000 recovery of a previous write-down on the inventory should be recognized.
c. Prepaid assets of P 4,600 and accrued liabilities of P 6,000 should be recognized.
Case # 1: O acquires half of N's interest for P 120,000.
Case # 2: O invests P 81,250 cash to the partnership in exchange for a 25% interest.
Case # 2, Scenario A: O's capital account is credited for the fair value of the 25% interest he acquired.
Case # 2, Scenario B: O's capital account is credited for P 100,000.
Required - For items 1-3, refer to Case #1
1. How much is the balance of M's capital account after O's admission?
a. P 191,600.70
b. P 192,600.70
c. P 193,600.80
d. P 194,600
2. How much is the balance of N's capital account after O's admission?
a. P 62, 200. 15
b. P 52,200.15
c. P 52,201.15
d. P 62, 201.15
3. What is the profit or loss sharing ratio of the partners after O's admission?
a. 50-50-50
b. 75-20-5
c. 70-15-15
d. 65-20-15
4. Under Case # 2, Scenario A: how much is the balance of M's capital account after O's admission?
a. P 194,794.2
b. P 191,600.7
c. P 172,000
d. P 182,456.8
5. Under Case # 2, Scenario B: how much is the balance of N's capital account after O's admission?
a. P 98,776.3
b. P 98,777.3
c. P 99,777.3
d. P 98,775.3