A, B and C were partners with capital balances on January 1, 2016, of P300,000, P200,000 and P100,000, respectively. On July 1, 2016, A retires from the partnership. On the date of retirement, the partnership net loss is P60,000 and the partners agreed that certain asset is to be revalued at P80,000 from its original cost of P50,000. The partners agreed further to pay A P225,000 in settlement of his interest. The remaining partners continue to operate under a new partnership. What is the total capital of the new partnership, after the retirement of A?

A, B and C were partners with capital balances on January 1, 2016, of P300,000, P200,000 and P100,000, respectively. On July 1, 2016, A retires from the partnership. On the date of retirement, the partnership net loss is P60,000 and the partners agreed that certain asset is to be revalued at P80,000 from its original cost of P50,000. The partners agreed further to pay A P225,000 in settlement of his interest. The remaining partners continue to operate under a new partnership. What is the total capital of the new partnership, after the retirement of A?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

L, E, and A are partners with capital balances of P787,500, P945,000, and P315,000, respectively. The partners share profits and losses in the ratio of 45:25:30, respectively. D is to join the partnership upon contributing P315,000 cash plus an equipment with fair value of P630,000 to the partnership in exchange for 20% interest in the capital and 25% interest in the profits and losses. After admission, the original partners will share profits and losses equally. How much is bonus to (from) D assuming the existing assets of the original partnership are overvalued by P192,500? Assuming the existing assets of the original partnership are undervalued by P192,500, what is the capital balance of A after the admission of D?
On August 1, 2016, A and B formed a partnership. A contributed inventory of P500,000, with a fair value of P300,000 while B contributed cash of P250,000 and a land that cost her P900,000 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: Each partner shall receive 5% interest on their beginning capital balance. A will receive a salary of P8,000 per month for managing the business. The remainder will be divided equally on the first year of operation and 60% and 40% on subsequent years. A and B is allowed to withdraw P5,000 per month. Any withdrawal is treated as direct reduction of capital. In 2016, the partnership has a net income of P100,000. On July 1, 2017, C was admitted in the partnership by investing P800,000 for a 25% interest. No revaluation of assets is to be recorded. After the admission of C, the partners agreed to divide profits, as follows: Each…
After a long dispute, AA, BB, and CC decided to liquidate their partnership. Their capital balances as of January 2, 2022 are as follows: AA, capital (25%) P750,000 BB, capital (40%) 900,000 CC, capital (35%) 560,000 The partnership’s total assets on this date include P250,000 cash and a receivable from AA amounting to P50,000 and noncash assets of a certain amount. Total liabilities to outside creditors, immediately before liquidation, are P640,000 and the partnership still owes CC an amount of P20,000. Liquidation expenses of P25,000 were paid during the liquidation proceedings. At the end of liquidation, BB received P575,000. How much is the carrying amount of the non-cash assets, other than the receivable from AA, immediately before liquidation?
UU,VV and WW were partners with capital balances on January 2, 2021 of P700,000, P840,000and 620,000 respectively. Their profit and loss ratio is 3:5:2. On August 1, 2021, UU retires form thepartnership. On the date of retirement, the partnership net loss is P480,000 and the partners agreedthat inventories are to be revalued at P370,000 from its original cost of P340,000. The partnersagreed further to pay UU P568,500 in settlement of his interest. Upon retirement of UU, which of thefollowing will result? a, Bonus to VV is P2,500b. Bonus from WW is P1,000c. Goodwill of UU is P3,500d. VVs capital after retirement of UU is P85,000 higher that WW
The Prince-Robbins partnership has the following capital account balances on January 1, 2018: Prince is allocated 80 percent of all profits and losses with the remaining 20 percent assigned to Robbins after interest of 10 percent is given to each partner based on beginning capital balances. On January 2, 2018, Jeffrey invests $37,000 cash for a 20 percent interest in the partnership. This transaction is recorded by the goodwill method. After this transaction, 10 percent interest is still to go to each partner. Profits and losses will then be split as follows: Prince (50 percent), Robbins (30 percent), and Jeffrey (20 percent). In 2018, the partnership reports a net income of $15,000. Prepare the journal entry to record Jeffrey’s entrance into the partnership on January 2, 2018. Determine the allocation of income at the end of 2018.
Goodman, Pinkman, and White formed a partnership on January 1, 2020, and made capital contributions of $125,000 (Goodman), $175,000 (Pinkman), and $250,000 (White), respectively. With respect to the division of income, they agreed to the following: (1) interest of an amount equal to 10% of the that partner’s beginning capital balance for the year; (2) annual compensation of $15,000 to Pinkman; and (3) the remainder of the income or loss to be split among the partners in the following percentages: (a) 20% for Goodman; (b) 40% for Pinkman; and (c) 40% for White. Net income was $200,000 in 2020 and $240,000 in 2021. Each partner withdrew $1,500 for personal use every month during 2020 and 2021. What was Goodman’s total share of net income for 2020?
Bryan and Cody each contributed $120,000 to the newly formed BC Partnership in exchange for a 50% interest. The partnership used the available funds to acquire equipment costing $200,000 and to fund current operating expenses. The partnership agreement provides that depreciation will be allocated 80% to Bryan and 20% to Cody. All other items of income and loss will be allocated equally between the partners.Upon liquidation of the partnership, property will be distributed to the partners in accordance with their § 704(b) book capital account balances. Any partner with a negative capital account must contribute cash in the amount of the negative balance to restore the capital account to $0. In its first year, the partnership reported an ordinary loss (before depreciation) of $80,000 and depreciation expense of $36,000. In its second year, the partnership reported $40,000 of income from operations (before depreciation), and it reported depreciation expense of $57,600. a. Calculate the…
After a long dispute, AA, BB, and CC decided to liquidate their partnership. Their capital balances as of January 2, 2022 are as follows: AA, capital (25%) P750,000 BB, capital (40%) 900,000 CC, capital (35%) 560,000 The partnership’s total assets on this date include P250,000 cash and a receivable from AA amounting to P50,000 and noncash assets of a certain amount. Total liabilities to outside creditors, immediately before liquidation, are P640,000 and the partnership still owes CC an amount of P20,000. Liquidation expenses of P25,000 were paid during the liquidation proceedings. At the end of liquidation, BB received P575,000. How much were the non-cash assets sold for?
BRAIN and FREEZE have capital balances of P750,00 and P500,000 and share in partnership profits and losses in the ratio of 3:2 each respectively. On November 30, 2020, the partners admitted HURTS into the partnership by investing P200,000 cash and a machine to be used by the partnership for a 20% interest. After HURT’s admission, BRAIN’s capital increased by 10%. What is the fair value of the machine invested by HURT in the partnership?
X, Y, and Z are partners sharing profits and losses in the ratio of 5:3:2. During the year, their investments and withdrawals are as follows: Investment of X, Y, and Z for P200,000, P175,000 and P375,000 respectively. Withdrawals of X, Y, and Z amounting to P125,000, P62500 and P62,500 respectively. On December 31, 2021, the partners decided to liquidate their business. After exhausting partnership assets, liabilities of P125,000 remain unpaid. X is personally insolvent. The gain or loss on realization is:
The capital account for the partnership A and B at October 31, 2011 are as follows: A, capital P80,000 and B, capital P40,000. 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 C as a partner with one-third interest in the capital and profits and losses upon his investment of P30,000. Immediately after C’s admission what should be the capital balances of A, B and C, respectively assuming bonus method is used.
May and Jun are partners with profit and loss ratio of 55:45 and capital balances of ₱530,000 and ₱370,000, respectively. On June 9, 2022, Julie was admitted into the partnership by investment for a 40% of the total partnership capitalization. However, before the admission of Julie, the partners agreed that the asset “Equipment” should be revalued from ₱800,000 to ₱500,000. How much cash is to be invested by Julie?