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Part 1

Castro and Falceso are partners who agree to admit Garachico to the partnership. There are four assumptions about Garachico's admission: 1) Garachico pays Castro $50,000 for 40% of Castro's interest. 2) Garachico invests $50,000 for a one-sixth interest. 3) Garachico invests $50,000 for a 25% interest. 4) Garachico invests $50,000 for a 15% interest. The capital balances and profit/loss ratios of each partner are then calculated under each assumption.

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6K views3 pages

Part 1

Castro and Falceso are partners who agree to admit Garachico to the partnership. There are four assumptions about Garachico's admission: 1) Garachico pays Castro $50,000 for 40% of Castro's interest. 2) Garachico invests $50,000 for a one-sixth interest. 3) Garachico invests $50,000 for a 25% interest. 4) Garachico invests $50,000 for a 15% interest. The capital balances and profit/loss ratios of each partner are then calculated under each assumption.

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PRETTYKO
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Problem #2

Admission by Purchase of Interest or Investment of Assets


Castro and Falceso are partners who share profits and losses in a ratio of 2:3, respectively,
and have the following capital balances on Sept. 30, 2020: Castro, Capital, P100,000 Cr.
and Falceso, Capital, P150,000 Cr. The partners agreed to admit Garachico to the partnership.
Required: Calculate the capital balances of each partner after the admission of Garachico,
assuming that bonuses are recorded when appropriate for each of the following assumptions:
1. Garachicho paid Castro P50,000 for 40% of his interest.
2. Garachico invested P50,000 for a one-sixth interest in the partnership.
3. Garachico invested P50,000 for a 25% interest in the partnership.
4. Garachico invested P50,000 for a 15% interest in the partnership.

1 Garachicho paid Castro P50,000 for 40% of his interest.


Amount P&L
Castro, Capital 60,000.00 24%
Falceso, Capital 150,000.00 60%
Garachico, Capital 40,000.00 16%
Total 250,000.00

Castro, Capital 40,000.00


Garachico, Capital 40,000.00

2 TContributedC Interest TAgreedC Difference


Old 250,000.00 250,000.00 -
New 50,000.00 50,000.00 -
Total 300,000.00 300,000.00 -

Cash 50,000.00
Garachico, Capital 50,000.00

Amount P&L
Castro, Capital 100,000.00 1/3
Falceso, Capital 150,000.00 1/2
Garachico, Capital 50,000.00 1/6
Total 300,000.00

3 TContributedC Interest TAgreedC Difference


Old 250,000.00 75% 225,000.00 - 25,000.00
New 50,000.00 25% 75,000.00 25,000.00
Total 300,000.00 300,000.00 -

Cash 50,000.00
Castro, capital 10,000.00
Falceso, capital 15,000.00
Garachico, capital 75,000.00
P&L
Castro, Capital 90,000.00 30%
Falceso, Capital 135,000.00 45%
Garachico, Capital 75,000.00 25%
Total 300,000.00

4 TContributedC Interest TAgreedC Difference


Old 250,000.00 85% 255,000.00 5,000.00
New 50,000.00 15% 45,000.00 - 5,000.00
Total 300,000.00 300,000.00 -

Cash 50,000.00
Garachico, capital 45,000.00
castro, capital 2,000.00
Falceso, capital 3,000.00
P&L
Castro, Capital 102,000.00 34% 40 34%
Falceso, Capital 153,000.00 51% 60
Garachico, Capital 45,000.00 15%
Total 300,000.00
Amount P&L
Castro, Capital 100,000.00 2 40%
Falceso, Capital 150,000.00 3 60%
Total 250,000.00

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