Problem #15 The following condensed statement of financial position is presented for the partnership of Morales, Gamino, and Quito, who share profits and losses in the ratio of 4:3:3, Determining a New Partner's Investment Cost respectively. Accounts Payable Morales, Capital Gamino, Capital Quito, Capital Total Liabilities and Capital P150,000 260,000 180,000 160,000 P750,000 P 40,000 Cash 710,000 Other Assets Total Assets P750,000 Assume that the partnership decided to admit Abello as a new partner with a one- fourth interest. Required: For each of the following independent cases, determine the amount that Abello must contribute in cash or other assets: 1. No goodwill or bonus will be recorded. 2. A bonus of P24,000 is to be paid by Abello and allocated to the prior partners. 3. The partners agreed that total resulting capital should be P820,000 and no goodwill should be recognized. 4. Other assets are written down by P20,000 and a bonus of P40,000 is paid to Abello at the time of admission.
Problem #15 The following condensed statement of financial position is presented for the partnership of Morales, Gamino, and Quito, who share profits and losses in the ratio of 4:3:3, Determining a New Partner's Investment Cost respectively. Accounts Payable Morales, Capital Gamino, Capital Quito, Capital Total Liabilities and Capital P150,000 260,000 180,000 160,000 P750,000 P 40,000 Cash 710,000 Other Assets Total Assets P750,000 Assume that the partnership decided to admit Abello as a new partner with a one- fourth interest. Required: For each of the following independent cases, determine the amount that Abello must contribute in cash or other assets: 1. No goodwill or bonus will be recorded. 2. A bonus of P24,000 is to be paid by Abello and allocated to the prior partners. 3. The partners agreed that total resulting capital should be P820,000 and no goodwill should be recognized. 4. Other assets are written down by P20,000 and a bonus of P40,000 is paid to Abello at the time of admission.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
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Transcribed Image Text:The following condensed statement of financial position is presented for the partnership
of Morales, Gamino, and Quito, who share profits and losses in the ratio of 4:3:3,
PROFESSOR:
NAME:
SECTION:
Problem #15
Determining a New Partner's Investment Cost
respectively.
Accounts Payable
Morales, Capital
Gamino, Capital
Quito, Capital
Total Liabilities and Capital
P150,000
260,000
180,000
160,000
P750,000
P 40,000
710,000
Cash
Other Assets
Total Assets
P750,000
Assume that the partnership decided to admit Abello as a new partner with a one-
fourth interest.
Required:
For each of the following independent cases, determine the amount that Abello must
contribute in cash or other assets:
1. No goodwill or bonus will be recorded.
2. A bonus of P24,000 is to be paid by Abello and allocated to the prior partners.
3. The partners agreed that total resulting capital should be P820,000 and no goodwill
should be recognized.
4. Other assets are written down by P20,000 and a bonus of P40,000 is paid to Abello
at the time of admission.
3-34 WI
WIN O
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