Reference no: EM132627749
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
Accounts Payable 7,500
Inventories 60,000
JAZZ, Loan 5,000
Equipment 75,000
LAKERS, Capital 100,000
Trademark 22,500
HEAT, Capital 90,000
JAZZ, Capital 45,000
Total Assets 247,500
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:
Question 1. If JAZZ retired and received P 38,500 as a retirement price, how much will be the bonus to or (from) HEAT?
Question 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?
Question 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)?
Question 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)?
Question 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)?