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03- Partnership Dissolution- Solutions
accounting information system (bsais1)
Marinduque State College
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Partnership Dissolution
Part I: Theory of Accounts
Which of the following statements pertains to partnership dissolution? a. It refers to the process of converting the non-cash assets of the partnership and distributing the total cash to the creditors and the remainder to the partners. b. It refers to the change in the relation of the partners caused by any partner ceasing to be associated in the carrying on of the partnership. c. It refers to the extinguishment of the juridical personality of the partnership. d. It refers to the end of the life of the partnership.
Which of the following will not result to the dissolution of a partnership? a. Insolvency of the partnership b. Admission of a new partnering an existing partnership c. Assignment of an existing partner’s interest to a third person d. Retirement of a partner
Which of the following statements is correct when a new partner is admitted to an existing partnership by purchasing a portion of a capital interest of an existing partner? a. It will result to revaluation or impairment of existing assets of the partnership. b. The partnership will recognize gain or loss in the transfer of capital from one partner to another partner. c. The partnership is not dissolved by the admission of a new partner by purchase. d. It will just result to credit to capital of newly admitted partner with corresponding debit to capital of the selling partner.
In case of admission of a new partner in an existing partnership through investment to the partnership, which of the following scenario will result to bonus to new partner and asset revaluation? a. The total contributed capital of all partners s equal to the total agreed capital of new partnership while the agreed capital of new partner is higher than the amount he has contributed. b. The total contributed capital of all partners is more than the total agreed capital of new partnership while the agreed capital of new partner is lower than the amount he has contributed. c. The total contributed capital of all partners is less than the total agreed capital of new partnership while the agreed capital of new partner is higher than the amount he has contributed. d. The total contributed capital of all partners is more than the total agreed capital of new partnership while the total agreed capital of old partners is equal to the amount they contributed.
If a partner who retired from the partnership receives less than the capital balance before retirement which also resulted to decrease in the capital balance of remaining partners, which is correct? a. The retiring partner receives bonus from remaining partner. b. An impairment loss is recognized before the retirement. c. Revaluation surplus is recognized before the retirement. d. The retiring partner gives bonus to the remaining partner.
Part II: Problem Solving
- On December 31, 2020, the Statement of Financial Position of DEF Partnership provided the following data with profit or loss ratio of 1:6:3:
Current Assets 1,000,000 Total Liabilities 600, Non-current Assets 2,000,000 D, Capital 900, E, Capital 800, F, Capital 700,
On January 1, 2021, G is admitted to the partnership by purchasing 40% of the capital interest of E at a price of P500,000.
What is the capital balance of E after the admission of G on January 1, 2021? a. 540, b. 480, c. 420, d. 300,
- On December 31, 2018, the Statement of Financial Position of ABC Partnership provided the following data with profit or loss ratio of 1:6:3:
Current Assets 1,300,000 Total Liabilities 300, Non-current Assets 2,000,000 A, Capital 1,400, B, Capital 700, C, Capital 900,
On January 1, 2019, D is admitted to the partnership by investing P1,000,000 to the partnership for 20% capital interest. If all the assets of the existing partnership are properly valued, what is the capital balance of C after the admission of D? a. 960, b. 900, c. 840, d. 1,200,
- On December 31, 2018, the Statement of Financial Position of ABC Partnership provided the following data with profit or loss ratio of 5:1:4:
Current Assets 1,500,000 Total Liabilities 500, Non-current Assets 2,000,000 A, Capital 1,100, B, Capital 1,200, C, Capital 700, On January 1, 2019, D is admitted to the partnership by investing P500,000 to the partnership for 10% capital interest. The total agreed capitalization of the new partnership is P3,000,000.
What is the capital balance of D after his admission to the partnership? a. 500, b. 300, c. 350, d. 400,
What is the capital balance of C after the admission of D to the partnership?
with him expertise and is to invest cash for a 25% interest in the partnership which includes a credit of P735,000 for bonus upon his admission.
How much cash should D contribute?
a. 1,323, b. 2,100, c. 1,575, d. 588,
- E and M are partners with capital balances of P30,000 and P70,000, respectively. E has a 30% interest in profits and losses. At this time, the partnership has decided to admit R and L as new partners. R contributes cash of P55,000 for a 20% interest in capital and a 30% interest in profits and losses. L contributes cash of P10,000 and an equipment for a 25% interest in capital and 35% interest in profits and losses.
If bonus amounting to P18,250 is given to the old partners, what is the value of the equipment contributed by L? a. 31, b. 43, c. 50, d. 50,
- Juliet and Kilo have capital balances of P200,000 and P220,000 respectively before admission of Lima, their profit and loss agreement was 35:65. Lima was to be admitted for 40% interest in the partnership and 20% in the profits and losses by contributing a used machine which had a cost of P205,000 and an appraised value of P180,000. After admission of Lima, Juliet and Kilo agreed to share profits and losses equally. At the end of the year the new partnership generated net income of P130,000.
How much is the capital balance of Kilo after admission of Lima? a. 174, b. 259, c. 181, d. 240,
How much is the capital balance of Juliet at the end of the year? a. 231, b. 221, c. 224, d. 247,
Assuming there is an implied undervaluation or overvaluation of an asset, how much is the undervaluation or (overvaluation) of the asset? a. 300, b. (150,000) c. (300,000) d. 150,
Assuming there is an implied undervaluation or overvaluation of an asset, how much is the capital balance of Kilo at the end of the year? a. 467,
- b. 77,
- c. 369,
- d. 174,
03- Partnership Dissolution- Solutions
Course: accounting information system (bsais1)
University: Marinduque State College
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