Dissolution

SPECIALIZED ACCOUNTING – DISSOLUTION
Luffy and Zorro sells furniture through their partnership. They expand their business and decide to admit Sanji to their partnership.
Before admission of Sanji, the statement of financial position of Luffy and Zorro are as follows:
Cash 40,000.00 Accounts Payable 70,000.00

Accounts Receivable 60,000.00 Loan from Zorro 50,000.00
Inventory 140,000.00 Luffy, Capital (60%) 300,000.00
Plant Assets – net 360,000.00 Zorro, Capital (40%) 240,000.00
Loan to Luffy 60,000.00
Total Assets 660,000.00 Total Liab & Equity 660,000.00
1. Sanji invests 139,500 for half of Zorro’s capital. The money goes to Zorro. The amount of personal gain to be recorded in
the partnership books is:
2. Sanji invests 139,500 in cash for a 20% interest. Luffy and Zorro agree that the plant asset is undervalued before Sanji’s
admission. If the money goes to the original partners, the capital balance of Luffy, Zorro and Sanji after admission is:
3. Sanji invests the amount needed to give him one-third interest in the capital of the partnership. If no goodwill or bonus is
recorded, the amount of investment by Sanji is:
4. Sanji invests 156,000 for a one-fourth interest. Luffy and Zorro agree that some of the inventory is obsolete before Sanji
admission. After admission, profit and loss are to be shared by Luffy, Zorro and Sanji 45:30:25. The capital balance of
Luffy, Zorro and Sanji after admission is:
5. Sanji invests 300,000 for a 1/3 interest. Profits and loss are to be shared by Luffy, Zorro and Sanji equally. Capital of the
partnership after Sanji’s admission is to be 900,000. The capital balance of Luffy, Zorro and Sanji after admission is:
6. Tom and Jerry are partners who have capital balances of 300,000 and 240,000 and shares profits in the ratio of 6:4.
Mickey is admitted as a partner upon investing 250,000 for a 20% interest in the firm. Profits and loss are to shared
3:3:2. Using bonus method, how much is the bonus given to Tom and Jerry?
The following are the capital account balances and the profits and loss ratio of the partners in ABC Company on December 31, 2022
Capital account balances Profit and loss ratio

A 60,000 25%
B 80,000 50%
C 200,000 25%
Total 340,000 100%
On January 1, 2023, D is admitted to the partnership under the following agreement:
a. D is to share 1/3 in the profits and loss while the other partners continue to participate in profits and loss ratio in their
original ratio
b. D is to pay B, 24,000 for a ¼ interest of the latter’s equity in the partnership net assets and is to invest 140,000 cash in
the partnership
c. D’s capital account after the admission is to show 150,000 and the total capital is 520,000
7. The capital account balances of the partners after D’s admission are:
8. The new profit and loss ratio of all partners after D’s admission:
The partnership of Dendi, Miracle and Kuroky has been in business for a decade. On December 31, 2022, Kuroky decided to retire
from the partnership. The statement of financial position before the retirement of Kuroky is presented below:
Cash 40,000 Accounts Payable 70,000

Accounts Receivable 60,000 Notes Payable 80,000
Inventory 140,000 Loan from Miracle 50,000
Plants assets-net 400,000 Dendi, Capital (20%) 150,000
Loan to Dendi 30,000 Miracle, Capital (30%) 200,000
Loan to Kuroky 40,000 Kuroky, Capital (50%) 160,000
9. Kuroky was paid by the partnership 100,000 cash upon retirement. Capital of the partnership after Kuroky’s retirement is
400,000. The capital balance of Dendi and Miracle after the retirement of Kuroky is:
10. Kuroky was paid by the partnership 180,000 cash upon retirement. Capital of the partnership after Kuroky’s retirement is
290,000. The capital balance of Dendi and Miracle after the retirement of Kuroky is:
11. Kuroky was paid by the partnership 150,000 cash upon retirement. The portion of goodwill attributable to Kuroky was
recorded by the partnership. The capital balance of Dendi and Miracle after the retirement of Kuroky is:
12. Due to limited cash of the partnership, Kuroky was paid by the partnership merchandise with a fair value of 100,000 and
a note payable for 50,000. The carrying amount of the merchandise was 60,000. Capital of the partnership after Kuroky’s
retirement was 360,000.

Dissolution

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SPECIALIZED ACCOUNTING – DISSOLUTION

Cash 40,000.00 Accounts Payable 70,000.00

Capital account balances Profit and loss ratio

On January 1, 2023, D is admitted to the partnership under the following agreement:

Cash 40,000 Accounts Payable 70,000

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