Reference no: EM132652914

Questions -

Problem 1: On August 1, 2010, Marie and Paz formed a partnership. Marie contributed inventory of P500,000 with a fair value of P300,000 while Paz contributed cash of P250,000 and a land valued that cost her P900,000 with a carrying amount of P1,000,000 and a fair value of P1,250,000. The partnership did not assume the mortgage attached to the property worth P250,000. The partners agree to allocate profits and losses as follows:

1. Each partner shall receive 5% interest on the amount of his beginning capital.

2. Marie will receive a salary of P8,000 per month.

3. The remainder will be divided equally on the first year and 60:40 on subsequent years.

4. Marie and Paz are allowed to withdraw P5,000 per month. Any withdrawal is treated as a direct reduction of capital.

In 2010, the partnership has a credit balance of income summary of P100,000. On July 1, 2011, Ivonne was admitted in the partnership by investing P800,000 for a 25% interest. Asset revaluation is to be recognized. After admission of Ivonne, the partners agreed to divide profits as follows:

1. Each partner shall receive 5% interest on the amount of his beginning capital.

2. All partners will receive a salary of P2,000 per month.

3. The balance to be divided 45% to Marie, 30% to Paz and 25% to Ivonne.

4. Each partner is allowed to withdraw P2,000 per month. Any withdrawal is treated as a direct reduction of capital.

In 2011, the partnership earned a profit of P300,000 evenly throughout the year. How much is the capital balance of Marie at the end of December 31, 2011?

Problem 2: Vida, Vina and Vita, sharing profits and losses 5:3:2, have capital credit balances of P400,000, P300,000 and P200,000 respectively. They decided to admit a new partner, Vera to a 30% interest in the partnership upon Vera's investment of an amount equal to five-sixths of her capital credit with no asset adjustment recognized. Immediately after the admission of Vera, what will be the capital credit balance of Vina?

Problem 3: PV, BK and TF were partners in Omaha Partnership. Their profit ratio is 50%, 30%, 20%, while their original capital interest ratio is 4:4:2. On July 1, 2014, JP was admitted by the partnership for 20% interest in capital and 25% in profits by contributing P87,500 cash, and the old partners agree to bring their interest to their original capital and profit interest sharing ratio. JP is the recipient of the transfer of capital of P280,000 from the existing partners. The partnership had net income of P210,000 before admission of JP and the partners agree to revalue its overvalued equipment by P35,000. Capital balance of BK increased by P10,500 as a result of the admission of JP, while the capital balance of TF at the start of the year is P700,000. What is the capital balance of PV at the start of the year?

Problem 4: SG, AP and TS are partners with capital balances of P784,000, P2,730,000 and P1,190,000 respectively, sharing profits and losses in the ratio of 3:2:1. DJ is admitted as a new partner bringing with him expertise and is to invest cash for a 25% interest in the partnership which includes a credit of P735,000 for bonus upon his admission. How much cash should DJ contribute?

Problem 5: On December 30, 2010, the balance sheet of Danger Co. has the following balances: Total assets P450,000: Willie loan P25,000; Willie capital P103,750; Manny capital P96,250 and Loren capital P225,000. The partners share profits and losses in the ratio of 25% to Willie, 25% to Manny, and 50% to Loren. It was agreed among the partners that Willie retires from the partnership and the partnership assets be adjusted to their fair values of P510,000 as of December 31, 2010. The partnership also suffered net loss of P150,000. The partnership would pay Willie P108,500 cash for his total interest in the partnership.

What is the capital balance of the remaining partners after the retirement of Willie under the:

a. Bonus method?

b. Partial revaluation method?

c. Total revaluation method?

Problem 6: Ester, Judith and Martha were partners with capital balances on January 2, 2014 of P70,000, P84,000 and P56,000, respectively. Their loss sharing ratio 3:5:2. On July 1, 2014, Ester retires from the partnership. On the date of retirement the partnership net profit from operations is P48,000. The partners agreed further to pay Ester P76,560 in settlement of her interest. How much will be the capital of Judith after retirement of Ester?

Problem 7: On December 30, 2014, the Statement of Financial Position of DG Co. has the following balances: Total assets of P2,250,000, VL loan P125,000, VL capital P518,750, MD capital P481,250 and LV capital P1,125,000. The partners share profits and losses in the ratio of 25% to VL, 25% to MD and 50% to LV. It was agreed among the partners that VL retires from the partnership and the partnership assets be adjusted to their fair value of P2,550,000 as of December 31, 2014. The partnership also suffered net loss of P750,000. The partnership would pay VL the amount of P542,500 cash for his total interest in the partnership. What is the total capital of MD after retirement of VL?