Reference no: EM132627133

Question - LAKERS, JAZZ, and HEAT are partners sharing profits and losses of 40%, 40% and 20%, respectively. The December 31, 2020 balance sheet of the partnership before any profit allocation was summarized as follows:

ASSETS LIABILITIES & CAPITAL

Cash 90,000

Inventories 60,000

Equipment 75,000

Trademark 22,500

Total Assets 247,500

Accounts Payable 7,500

JAZZ, Loan 5,000

LAKERS, Capital 100,000

HEAT, Capital 90,000

JAZZ, Capital 45,000

Total Liabilities & Capital 247,500

The income summary account has a credit balance of P 25,000 for the year 2020. On January 1, 2020, a partner has decided to retire from the partnership and by mutual agreement among partners; the following have been arrived at:

Inventories amounting to P 10,000 is considered obsolete and must be written off

Equipment should be adjusted to their current value of P 50,000

Trademarks are to be written-off immediately before the retirement.

It was agreed that the partnership will pay the retiring partner for his interest in the partnership inclusive of loan balance.

REQUIRED -

1. If JAZZ retired and received P 38,500 as a retirement price, how much will be the bonus to or (from) HEAT?

2. If JAZZ retired and received P 38,500 as a retirement price, how much will be the adjusted capital of LAKERS under bonus method?

3. If JAZZ retired and received P 43,500, by how much will the adjusted capital of LAKERS under revaluation of asset method traceable to entire entity (full revaluation)?

4. If JAZZ retired and received P 41,000, by how much will the adjusted capital of HEAT be higher or (lower) than LAKERS under specific revaluation of asset method (specific revaluation)?

5. If JAZZ retired and received P 41,000, by how much will the adjusted capital of LAKERS under specific revaluation of asset method (specific revaluation)?