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Quiz # 3 - Partnership Dissolution Answer Key

This document contains solutions to problems regarding the dissolution of partnerships. Problem 1 compares the bonus method and goodwill method of partnership dissolution, concluding that the goodwill method is preferable as it provides an advantage of $276,000 to one partner. Problem 2 provides journal entries to record a withdrawing partner's capital under the bonus and goodwill methods. Problem 3 shows the calculation of remaining partners' capital balances after one partner's retirement.

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Camille Francisco Agustin
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119 views5 pages

Quiz # 3 - Partnership Dissolution Answer Key

This document contains solutions to problems regarding the dissolution of partnerships. Problem 1 compares the bonus method and goodwill method of partnership dissolution, concluding that the goodwill method is preferable as it provides an advantage of $276,000 to one partner. Problem 2 provides journal entries to record a withdrawing partner's capital under the bonus and goodwill methods. Problem 3 shows the calculation of remaining partners' capital balances after one partner's retirement.

Uploaded by

Camille Francisco Agustin
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Quiz # 3 - Partnership Dissolution Answer Key

Problem 1

Bonus Approach:

CC AC Difference
Old 1,620,000.00 1,896,000.00 276,000.00
New 750,000.00 474,000.00 (276,000.00)
Total 2,370,000.00 2,370,000.00 -

Goodwill Approach:

CC AC Difference
Old 1,620,000.00 3,000,000.00 1,380,000.00
New 750,000.00 750,000.00 -
Total 2,370,000.00 3,750,000.00 1,380,000.00

Computation of TAC:

=1,620,000/0.8
=2,025,000

=750,000/0.2
=3,750,000

*2,025,000 cannot be the total agreed capital since it is less than the total contributed capit

Answer: A. Prefer goodwill method due to Rick's advantage of 276,000.

Agreed Capital under Goodwill 750,000.00


Agreed Capital under Bonus 474,000.00
Advantage of Goodwill method 276,000.00

Problem 2.

1) Journal entry to record the withdrawal of T under the bonus method:

R, Capital 60,000.00
S, Capital 40,000.00
T, Capital 100,000.00 *
T, Capital 300,000.00
Cash 300,000.00

OR

T, Capital 200,000.00
R, Capital 60,000.00
S, Capital 40,000.00
Cash 300,000.00 (D)

3 2 1
* R S T
500,000.00 300,000.00 200,000.00
(60,000.00) (40,000.00) 100,000.00 ---> squeezed
440,000.00 260,000.00 300,000.00

2) Journal entry to record the withdrawal of T under the bonus method:

Goodwill 600,000.00
R, Capital 300,000.00
S, Capital 200,000.00
T, Capital 100,000.00 *

T, Capital 300,000.00
Cash 300,000.00

OR

Goodwill 600,000.00
T, Capital 200,000.00
R, Capital 300,000.00
S, Capital 200,000.00
Cash 300,000.00 ( C )

* R S T
500,000.00 300,000.00 200,000.00
300,000.00 200,000.00 100,000.00 ---> squeezed
800,000.00 500,000.00 300,000.00

Problem 3.
40% 15% 45%
D E F Total
Equity balances 103,000.00 77,000.00 180,000.00 360,000.00
Adj. (6,000.00) (2,250.00) (6,750.00) (15,000.00)
Net Loss (28,000.00) (10,500.00) (31,500.00) (70,000.00)
Bal. prior to D's retirement 69,000.00 64,250.00 141,750.00 275,000.00
Bonus to Rem. Partners (7,000.00) 1,750.00 5,250.00 -
62,000.00 66,000.00 147,000.00 275,000.00
Payment to D (62,000.00) (62,000.00)
Bal. after D's retirement - 66,000.00 147,000.00 213,000.00

Problem 4.

1) D.
2) B.
3) C.

Problem 5

1) Bonus Method CC AC Difference


Old 940,000.00 952,000.00 12,000.00
New 250,000.00 238,000.00 (12,000.00)
Total 1,190,000.00 1,190,000.00 -

2) Goodwill Method CC AC Difference


Old 940,000.00 1,000,000.00 60,000.00
New 250,000.00 250,000.00 -
Total 1,190,000.00 1,250,000.00 60,000.00

=940,000/0.8
=1,175,000

=250,000/0.2
=1,250,000

Problem 6.

1) Bonus Method 30% 30% 40%


K R M
35,000.00 35,000.00 40,000.00
(2,500.00) (2,500.00) 5,000.00
32,500.00 32,500.00 45,000.00

2) Goodwill Method 30% 30% 40%


K R M
35,000.00 35,000.00 40,000.00
3,750.00 3,750.00 5,000.00
38,750.00 38,750.00 45,000.00
e total contributed capital

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