Exercise 1: Admission of a New Partner by PurchaseMiguel, Neri and Orlando are partners whose capital balances and shares in profits as ofJanuary 1, 2019 are as follows:P/L RatioCapital BalanceP10,000MiguelNeri30%20,00020Orlando30,00050Pobre is being admitted into the partnership. Make the entries incidental to his admission undereach of the following cases:a. Pobre buys one-half of the interest of Orlando for P16,000.b. Pobre buys one -half of the interest of Neri for P13,000. The additional amount paid isconsidered for asset revaluation.c. Pobre pays P10,000 for two-fifths of the capital of Orlando. The partnership assets areoverstated.d. Pobre acquires one-fourth interest in the partnership paying P20,000 to Neri and Orlando.The asset revaluation is not to be recorded and capital transfers are in proportion to thecapital balances of the selling partners.

Given: To prepare the entries of the admission incidental for all the given as,

Answered: Capital Balance P10,000 20,000 30,000…

Business

Accounting

Capital Balance P10,000 20,000 30,000 P/I

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

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A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Exercise 1: Admission of a New Partner by Purchase
Miguel, Neri and Orlando are partners whose capital balances and shares in profits as of
January 1, 2019 are as follows:
P/L Ratio
Capital Balance
P10,000
Miguel
Neri
30%
20,000
20
Orlando
30,000
50
Pobre is being admitted into the partnership. Make the entries incidental to his admission under
each of the following cases:
a. Pobre buys one-half of the interest of Orlando for P16,000.
b. Pobre buys one -half of the interest of Neri for P13,000. The additional amount paid is
considered for asset revaluation.
c. Pobre pays P10,000 for two-fifths of the capital of Orlando. The partnership assets are
overstated.
d. Pobre acquires one-fourth interest in the partnership paying P20,000 to Neri and Orlando.
The asset revaluation is not to be recorded and capital transfers are in proportion to the
capital balances of the selling partners.

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