How much is the capital of AA upon formation of the partnership on January 1, 2017? How much is the capital of CC upon his admission by purchased interest on April 1, 2017? How much cash will BB receive on April 1, 2017 upon the admission of CC by purchase of interest?
Kindly help me with the following questions in Problem 1 with step by step solution. Thank you
THE NEXT ITEM(S) IS/ARE BASED ON THE FOLLOWING
On January 1, 2017, AA and BB formed a
Since January 1, 2017, the following events have occurred for the partnership:
Event 1: On April 1, 2017, after charging the old partners’ capital their share from a loss of P15,000 for the 1st quarter, CC was taken in as a partner by purchasing 20% partnership interest, proportionately from AA and BB as agreed among the partners. CC paid a total of P12,000 for the purchased interest and was given a 20% interest in profits. The old partners have agreed to maintain their old
Event 2: On July 1, 2017, to improve sales and profitability, the partnership merged with another firm owned by DD, after crediting the partners for a profit of P10,000 for the second quarter. DD’s net assets had a fair value of P30,000 when contributed and DD was given a 30% interest in capital and in profits. The old partners have agreed to maintain their old profit and loss ratios.
Event 3: On October 1, 2017, BB, whose family was to immigrate to Vancouver, Canada, withdrew from the partnership. The partnership recognized a profit of P15,000 for the 3rd quarter. It was agreed that the partnership net assets were fairly valued at that date and thus no revaluation had taken place upon BB’s withdrawal. BB was paid P30,000 from the partnership cash.
Event 4: In November 15, 2017, DD, a CPA-MBA gave notice of withdrawing from the partnership by the year-end. He was appointed a member of the Board of Accountancy and had to devote his time fully to this exciting new endeavour. The partners have decided to liquidate the partnership instead on December 31, 2017. The partnership recognized a profit of P20,000 for the 4th quarter ended. The loss on realization of assets was P8,000 and liquidation expenses paid were P4,000
- How much is the capital of AA upon formation of the partnership on January 1, 2017?
- How much is the capital of CC upon his admission by purchased interest on April 1, 2017?
- How much cash will BB receive on April 1, 2017 upon the admission of CC by purchase of interest?
- What will be the capital balance of BB upon DD's admission by investment on July 1, 2017?
- What will be the capital balance of DD after the retirement of BB on October 1, 2017?
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