DISSOLUTION

ADMISSION BY PURCHASE

1. Is the change in the relation of the partners ceasing to be associated in the carrying on of the
business

a. Dissolution

b. Winding Up

c. Termination

d. Formation

2. Which of the following forms of new partner admission will not results in a change in the
partnership assets?

a. Purchase of an ownership interest directly from the partnership

b. Purchase of an ownership interest directly from the partners

c. Either of the above

d. Neither kf the above

When admitting a new partner into an existing partnership, any allocation of revaluation of the
old partners is based on:

a. Fair Values of the assets of each partner has contributed to the partnership

b. The old profit/loss sharing ratio

c. Relative capital balances

d. The new profit/loss ratio

FORMULA

Payment/CAPITAL ratio of new partner = TOTAL capital of partnership x Capital ratio of OLD
partners = Capital after revaluation
1. Presented below is the condensed balance sheet of the partnership of Bryan, Remy, and
Patrick who share profits and losses in the ratio 6:3:1, respectively:

Cash....................... P85,000 Liabilities............... P80,000

Other Assets ........... 415,000 Bryan, Cap............. 252,000

Total P500,000 Remy, Cap............... 126,000

Patrick, Cap.............. 42,000

Total P500,000

The partners agree to sell Johnber 20% of their respective capital and profit and loss interests
for a total payment of P90,000. The payment by Johnber is to be made directly to the individual
partners. The capital balances of Bryan, Remy, Patrick, and Johnber, respectively after
admission of Johnber are:

2. Ruel and Nicole are partners in a retail business and divide profits using a sharing ratio of
60% and 40% respectively. Their capital balances at December 31, 2015 are as follows:

Ruel P180,000

Nicole P180,000

Total P360,000

The partners agree to admit Liezel into the partnership. Liezel purchases a one-third interest in
partnership capital and profits directly from Ruel and Nicole for P150,000. Assuming ASSETS
are revalued, the capital balances of Ruel, Nicole, and Lizel after the admission are:

ADMISSION BY INVESTMENT

When the investment of a new partner exceeds the new partner's initial capital balance and the
assets are FAIRLY VALUED, who whill receive the bonus?

a. the new partner

b. The old partnership in their old profit/losss ratio

c. The old partnership in thei new profit/loss ratio

d. The old and new partners

11. If A = Total Capital of the partnership before the admission of a new partner, B is the total
capital of the partnership after the investement of a new partner, C is the amount of the new
partner's investment, D is the amount of capital credit to the new partner. then there is:

a. A bonus to the new partner if B=A+C and D<C

b. Revaluation to the old partners if B>(A+C) and D=C

c. Neither bonus nor revaluation if B = A-CD>C

d. Revaluation to the new partner if B> (A+C) and D<C

80. Jesse, Joseph, and Leslie are partners with capital accounts of P70,000, P120,000, and
P90,000, respectively. The partnership share profits and losses 45%, 30%, and 25%,
respectively. They are considering allowing Hans to join the partnership by investing directly into
the partnership. The partners intend to revalue the assets before Hans' admission. Neither
bonus nor goodwill are required. If the asset's market value exceeds book value P150,000, how
much will Hans invest to acquire a 20% equity interest in the partnership?

a. P107,500 c. P86,000

b. P100,000 d. P70,000

75. The capital accounts for the partnership of LL and MM at October 31, 20x5 are as follows:

LL, capital P 80,000

MM, capital 40,000

P120,000

The partners share profits and losses in the ratio of 3:2 respectively.

The partnership is in desperate need of cash, and the partners agree to admit NN as a partner
with one-third in the capital and profits and losses upon his investment of P30,000. Immediately
after NN's admission, what should be the capital balances of LL, MM and NN respectively,
assuming bonus is to be recognized?

a. P50,000; P50,000; P50,000. c. P66,667; P33,333; P50,000.

b. P60,000; P60,000; P60,000. d. P68,000; P32,000; P50,000.

On August 1, 2015, the capital account balances of DIoney, Mely and Norma who share profits
and losses in the ratio 2:3:1, are P360,000, P225,000 and P135,000, respectively. At this time,
Pedro is admitted to the partnership by purchasing one-fifth interest in the firm for P150,000.
The old partners made personal settlement among themselves so that their capital will conform
to their profit and loss ratio. The partnership income for the five months period amount to
P80,000.

The new profit and loss ratio and the total capital of the firm after the admission of Pedro is:

a. 33 1/3%, 50%, 16 2/3%, 20%, P870,000

b. 26 2/3%, 40%, 13 1/3%, 20%, P720,000

c. 33 1/3%, 50%, 16 2/3%, 20%, P720,000

d. 26 2/3%, 40%, 13 1/3%, 20%, P870,000

73. The following condensed balance sheet is presented for the partnership of LL, PP, and QQ,
who share profits and losses in the ratio of 4:3:3, respectively:

Cash P 90,000

Other assets 830,000

LL, loan 20,000

P940,000

Accounts payable P210,000

QQ, loan 30,000

LL, capital 310,000

PP, capital 200,000

QQ, capital 190,000

P940,000

Assume that the assets and liabilities are fairly valued on the balance sheet and that the
partnership decides to admit FF as a new partner, with a 20% interest. No goodwill or bonus is
to be recorded. How much should FF contribute in cash or other assets?

a. P 140,000 c. P175,000

b. 142,000 d. 177,500
Mitz, Marc and Mart are partners sharing earnings in the ratio of 5:3:2 respec¬tively. As of
December 31, 2013, their capital balance showed P95 000 for Mitz, P80,000 for Marc, and
P60,000 for Mart.

On January 1, 2016 the partnerhsip admitted Vince as a new partner and according to the
partnership agreement, Vince will contribute P80,000 in cash to the partnerhsip and will also
pay P10,000.00 for 15% of Marc's share. Vince will share 20% in the earnings while the ratio of
the original partners will remain proportionately the same as before Vince admission. After
Vince' admission, the total capital of the partnership will be P330,000, while Vince' capital
account will be P70,000.

The balance of Marc's capital account after the admission of Vince would be:

Dissolution by withdrawal

1. When Jill retired from the partnership of Jill. Bill. and Hill, the final settlement of her Interest
exceeded her capital balance. Under the bonus method, the excess:

a. Was recorded as goodwill.

b. Was recorded as an expense.

c. Reduced the capital balances of Bill and Hill.

d. Had no effect on the capital balances of Bill and I fill.

2. When a partner retires and receives in cash less than his capital balance, how should the
difference be treated?

a. The difference should be credited to all the partners in their profit and loss ratio.

b. The difference should be debited to all the partners in their profit and loss ratio.

c. The difference should be credited to the remaining partners in their remaining profit and loss
ratio.

d. The difference should be debited to the remaining partners in their remaining profit and loss
ratio.

On June 30, 2016 the balance sheet for the partnership of Cruz, Merced and Prieto, together
with their respective profit and loss ratio, were as follows:

Assets, at cost P180,000

Cruz, loan 9,000

Cruz, capital (20%) 42,000

Merced, capital (20%) 39,000

Prieto, capital (60%) - 90,000,

180,000

Cruz had decided to retire from the partnership. By mutual agreement, the assets are to be
adjusted to their fair valuve of P216,000 at June 30, 2016. It was agreed that the partnership
would pay Cruz P61,200 cash for Cruz partnership interest, including Cruz's loan which is to be
repaid in full. No goodwill is to be recorded. After Cruz's retirement, what is the balance of
Merced capital account?

a. P36,450

b. P39,000

c. P45,450

d. P46,200

Assuming the assets are fairly valued, what is the balance of Merced capital account? (Bonus
Method)

Daenerys, Sansa, Arya are partners with capital balances on June 30, Profits and losses are
shared equally. Tina withdraws from the partnership. The partners agree that Tina is to take
certain furniture at their second hand value of P2,400 and cash for the balance of her interest.
The furniture is carried on the books fully depreciated.

The amount of cash to be paid to Tina _________.

Capital Balances of the remaining partners after Tina’s retirement _____.