Problems: Problem 4 - 1

PROBLEMS
Problem 4 – 1 (Admission of a New Partner under Various Assumptions)
Carmen and Centeno are partners with capital balances of P160,000 and P80,00. They
share profits 60%, 40%, respectively. The partners agree to admit Corrales as a
member of the firm.
Instructions: Give the required entries on the partnership books to record the admission
of Corrales under each of the following assumptions:
1. Corrales purchases a ¼ interest in the firm. One-Fourth of each partner’s capital

is to be transferred to the new partner. Corrales pays the partners P60,000,
which is divided between them in proportion to the equities given up.
2. Corrales purchases a 1/3 interest in the firm. One-Third of each partner’s capital
is to be transferred to the new partner. Corrales pays the partners P120,000,
which is divided between them in proportion to the equities given up. Before
Corrales admission, asset revaluation is undertaken and recorded on the firm
books so that Corrales’ 1/3 interest will be equal to the amount of his payment.
3. Corrales invests P120,000 for a ¼ interest in the firm. Asset revaluation is

recorded on the firm books prior to the admission.
4. Corrales invests P120,000 for a 50% interest in the firm. Carmen and Centeno
transfer part of their capital to that of Corrales as a bonus.
5. Corrales invests P160,000 for a 50% in the firm. P40,000 is to be considered a

bonus to partners Carmen and Centeno.
6. Corrales invests P160,000 in the firm and allowed a bonus to partners Carmen
and Centeno of P20,000 upon his admission.
7. Corrales invests P100,000 for a ¼ interest in the firm. The total firm capital after
his admission is to be P340,000.
8. Corrales invests P110,000 for a ¼ interest in the firm. The total firm capital after
9. Corrales invests P96,000 for a 1/3 interest in the firm. The total firm capital after
10. Corrales invests sufficient cash for a 1/5 interest.

Coral and Corpuz are partners with capital balances of P180,000 and P120,000,
respectively. They share profits and losses in the ratio of 4:1. They agree to admit
Calma to the partnership.
Instructions: Journalize the admission of Calma to the partnership for each of the
following independent assumptions:
1. Calma is admitted to a one-third interest in capital with a contribution of

P150,000.
2. Calma is admitted to a one-fourth interest in capital with a contribution of

P120,000. Total capital of the partnership is to be P420,000.
3. Calma is admitted to a one-fourth interest in capital upon contributing of P60,000.

The total capital of the partnership is to be P360,000.
4. Calma is admitted to a one-fourth interest in capital by the purchase of one-fourth

of the interest of Coral and Corpuz for P82,500. Total capital of the new
partnership is to be P300,000.
5. Same conditions as in (4), except that the new partnership CAPITAL is to be

P330,000 due to the asset revaluation undertaken prior to the admission of
Calma.
6. Calma is admitted to a one-fifth interest in capital upon contributing P90,000.

Total capital of the new partnership is to be P450,000.
In 2012, Castillo and Cordova established a partnership. Their operations have been
very successful. Since Castillo devotes full-time to the business and Cordova part-time,
they share profits and losses in the ratio of 7:3, respectively. At the beginning of 2014,
Coloma expressed his interest in joining the partnership. The capital balances of
Castillo and Cordova on this date are P560,000 and P840,000, respectively.
Instructions:
1. Prepare the entries to record the admission of Coloma into the partnership under
each of the following independent assumptions:
a. Coloma invests P350,000 cash for a 1/5 interest in the partnership.
b. Coloma invests P500,000 cash for a 1/4 interest in net asset; the bonus method
is used.
c. Coloma invests P700,000 cash for a 1/4 interest the asset revaluation method is
to be used.
d. Coloma pays Castillo and Cordova a total of P550,000 cash for 1/4 of their
respective capital interest.
e. Coloma pays Castillo and Cordova a total of P350,000 for a 1/5 of their
respective capital interest; no asset revaluation is undertaken prior to the
admission of Coloma.
2. Assuming Coloma paid a total of P600,000 to Castillo and Cordova for two-fifths
of their respective capital balances, prepare a schedule determining the amount
of cash to be transferred to Castillo and Cordova.
The following statement of financial position is for the partnership of Cortes, Canda and
Cena, who share profits and losses in the ratio of 3:2:1 respectively.
Assets Liabilities and Capital
Cash P 90,000 Liabilities P 210,000

Other Assets 810,000 Cortes, Capital 420,000
Canda, Capital 240,000
_________ Cena, Capital 30,000
Total assets P 900,000 Total Liabilities and Capital P 900,000
Instructions:
1. Assume that the assets and liabilities are valued fairly, and that the partnership
wishes to admit Cruz as a new partner with one-fifth interest in capital. Without
recording bonus, determine what Cruz’s contribution should be.
2. If Cruz contributes P210,000 for a one-fifth interest, determine the new capital
balances of each partner using: (a) the bonus method, and (b) the asset
revaluation method.

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PROBLEMS

Problem 4 – 1 (Admission of a New Partner under Various Assumptions)

1. Corrales purchases a ¼ interest in the firm. One-Fourth of each partner’s capital

3. Corrales invests P120,000 for a ¼ interest in the firm. Asset revaluation is

5. Corrales invests P160,000 for a 50% in the firm. P40,000 is to be considered a

10. Corrales invests sufficient cash for a 1/5 interest.

1. Calma is admitted to a one-third interest in capital with a contribution of

2. Calma is admitted to a one-fourth interest in capital with a contribution of

3. Calma is admitted to a one-fourth interest in capital upon contributing of P60,000.

4. Calma is admitted to a one-fourth interest in capital by the purchase of one-fourth

5. Same conditions as in (4), except that the new partnership CAPITAL is to be

6. Calma is admitted to a one-fifth interest in capital upon contributing P90,000.

Problem 4 – 3 (Admission of a New Partner under Various Assumptions)

a. Coloma invests P350,000 cash for a 1/5 interest in the partnership.

Problem 4 – 4 (Admission of a New Partner under Various Assumptions)

Assets Liabilities and Capital

Cash P 90,000 Liabilities P 210,000

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