Chapter 3 – 2013 ed

June 13, 2018 | Author: Jean Palada | Category:Goodwill (Accounting)
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42
Chapter 3
CHAPTER 3 MULTIPLE CHOICE ANSWERS AND SOLUTIONS 3-1: c Implied capital of the partnership (P90,000/20%) Actual value of the partnership Goodwill
P450,000 ( 420,000) P 30,000
Capital balances before Goodwill Goodwill to old partners Total Purchase by Hizon (20%) Capital balances after admission
AQUINO P252,000 __18,000 P270,000 ( 54,000) P216,000
LOCSIN P126,000 ___9,000 P135,000 ( 27,000) P108,000
DAVID P42,000 __3,000 P45,000 ( 9,000) P36,000
HIZON – _____– – _90,000 P 90,000
Capital balances before admission Purchase by Hizon (20%) Capital balances after admission
AQUINO P252,000 ( 50,400) P201,600
LOCSIN P126,000 ( 25,200) P100,800
DAVID HIZON P42,000 – ( 8,400) _84,000 P33,600 P 84,000
Capital transferred Excess divided using profit and loss ratio Cash distribution
AQUINO P 50,400 __3,600 P 54,000
LOCSIN P 25,200 __1,800 P 27,000
DAVID P 8,400 ___600 P 9,000
3-2: b
3-3: d TOTAL P 84,000 __6,000 P 90,000
3-4: b Selling price Interest sold (444,000X1/5) Combine gain
P132,000 ( 88,800) P 43,200
3-5: b Implied value of the partnership (P40,000/1/4) Actual value Goodwill
Cash balances Goodwill, Profit and Loss ratio Total Capital Transfer (1/4) Capital balances after admission
P160,000 ( 140,000) P 20,000 BERNAL P 80,000 __12,000 P 92,000 ( 23,000) P 69,000
CUEVAS DIAZ P40,000 P 20,000 __6,000 __2,000 P46,000 P 22,000 ( 11,500) ( 5,500) P34,500 P 16,500
Partnership Dissolution – Changes in Ownership
43
3-6: b Capital Transfer (20%) Excess, Profit and Loss ratio Cash distribution
BANZON P 16,000 __6,000 P 22,000
CORTEZ P 4,000 __4,000 P 8,000
TOTAL P20,000 _10,000 P30,000
Capital balances beginning Net profit, 1:2 Drawings Capital balances before admission Capital transfer (squeeze) Capital balances after admission 1:2
PEREZ P 24,000 5,430 ( 5,050) P 24,380 ( 5,570) P 18,810
CADIZ TOTAL P 48,000 P 72,000 10,860 16,290 ( 8,000) ( 13,050) P 50,860 P 75,240 ( 13,240) (18,810) (1/4) P 37,620 P 56,430
Capital transfer Excess, 1:2 Cash
P 5,570 __3,730 P 9,300
P 13,240 __7,460 P 20,700
3-7: d
3-8: a Total agreed capital (P150,000/5/6) Diana’s Interest Cash distribution
P180,000 1/6 P 30,000
Total agreed capital (P36,000/1/5) Total contributed capital (80,000+40,000+36,000) Unrecognized Goodwill
P180,000 ( 156,000) P 24,000
3-9: a
3-10: b Old partners New partner Total
Contributed Agreed Capital Capital P110,000 P100,000 __40,000 __50,000 P150,000 P150,000
Increase (Dec.) (P 10,000) _10,000 P –
Ben, capital balance before admission Bonus share to new partner (10,000X60%) Ben, capital after admission
P 60,000 ( 6,000) P 54,000
Total agreed capital (P40,000+20,000+17,000) Pete’s interest Pete’s agreed capital balance
P 77,000 1/5 P 15,400
3-11: c
P18,810 _11,190 P30,000
44
Chapter 3
3-12: b Old partner New partner Total
Contributed Capital P 65,000 25,000 (1/3) P 90,000
Agreed Capital P60,000 30,000 P90,000
Increase (Dec.) (P 5,000) _5,000 P –
Capital balances before admission Investment by Lory Bonus to Lory Capital balances after admission
FRED P 35,000 – ( 3,500) P 31,500
RAUL P30,000 – ( 1,500) P28,500
LORY – 25,000 __5,000 P 30,000
3-13: c Total agreed capital (90,000+60,000+70,000) Augusts’ interest Agreed capital Contributed capital Bonus to June & July
P220,000 _____1/4 P 55,000 __70,000 P 15,000 JUNE P90,000 __7,500 P97,500
Capital balances before admission Bonus from August, equally Capital balances after admission
JULY P 60,000 __7,500 P 67,500
3-14: a Total agreed capital (52,000 + 88,000)/80%) Total capital of Mira & Nina after admission Cash paid by Elma
P175,000 ( 140,000) P 35,000
Total agreed capital (P41,600/2/3) Total contributed capital (P23,000+18,600+16,000) Goodwill to new partner, Ang
P 62,400 ( 57,600) P 4,800
3-15: a
Capital balances before admission Investment by Ang Goodwill to August Capital balances after admission
LIM P23,000 – _____– P23,000
ONG P 18,600 – ______– P 18,600
ANG – 16,000 __4,800 P20,800
Partnership Dissolution – Changes in Ownership
45
3-16: a
Capital balances before admission Admission by Dong: By Purchase (1/2) By Investment Capital balances before Goodwill and Bonus Goodwill to Old Partners (sch. 1) Bonus to Old Partners (sch. 1) Capital balances after admission
ANG
BENG
CHING
DONG
TOTAL
P600,000
P 400,000
P 300,000

P1,300,000
( 300,000) _______–
– _______–
– _______–
300,000 _300,000
– ___300,000
P300,000 150,000 __37,500
P 400,000 150,000 __37,500
P 300,000 100,000 __25,000
P600,000 – ( 100,000)
P1,600,000 400,000 ________–
P487,500
P 587,500
P 425,000
P500,000
P2,000,000
Schedule 1: Old Partners New Partner Total
CC AC P 1,000,000 P1,500,000 600,000 (25%) __500,000 P 1,600,000 P2,000,000
Inc. (Dec.) P500,000 ( 100,000) Bonus P400,000 GW
3-17: b Capital balances before admission of Alma Admission of Alma: Investment Goodwill to old partner, 70:30 (sch. 1) Capital balances before admission of Lorna Admission of Lorna: Goodwill Written off, 5:3:2 Investment Goodwill to old partners, 5:3:2 (sch. 2) Capital balances after admission
MONA
LIZA
ALMA
LORNA
TOTAL
P150,000
P 50,000


P 200,000


80,000

80,000
__28,000
___12,000
_______–
______–
___40,000
P178,000
P 62,000
P 80,000

P 320,000
(P 20,000) –
(P 12,000) ( –
P8,000) –
– 75,000
( P40,000) 75,000
__10,000
____6,000
____4,000
______–
___20,000
P168,000
P 56,000
P 76,000
P 75,000
P 375,000
Schedule 1: Total agreed capital (80,000/25%) Total capital contributed (200,000+80,000) Goodwill to old partners, 70:30
P 320,000 ( 280,000) P 40,000
Schedule 2: Total agreed capital (75,000/20%) Total contributed capital (280,000+75,000) Goodwill to old partners, 5:3:2
P 375,000 ( 355,000) P 20,000
46
Chapter 3
3-18: c Unadjusted capital balances Overvaluation of Marketable Securities Allowance for Bad Debts Adjusted capital balances before admission
RED P175,000 ( 12,500) ( 12,500) P150,000
Total agreed capital (270,000/2/3) Green’s interest Investment
P405,000 1/3 P135,000
WHITE P100,000 ( 7,500) ( 7,500) P 85,000
BLUE P 45,000 ( 5,000) ( 5,000) P 35,000
TOTAL P320,000 ( 25,000) ( 25,000) P270,000
3-19: b Capital balances before admission Capital transfer to WW (1/6) Balances Equalization of capital Balances Net profit, equally Drawings (2 months) Capital balances before WWs Investment
XX
YY
ZZ
WW
TOTAL
P360,000
P225,000
P135,000

P720,000
( 60,000) P300,000 ( 100,000) P200,000 3,150 _( 1,500)
( 37,500) P187,500 __12,500 P200,000 3,150 _( 2,000)
( 22,500) P112,500 __87,500 P200,000 3,150 _( 1,500)
_120,000 ______– P120,000 P720,000 ______– ______– P120,000 P720,000 3,150 12,600 _( 2,000) _( 7,000)
P201,650
P201,150
P201,650
P121,150
Total agreed capital (201,650+201,150+201,650)/2/3 WW’s interest Agreed capital of WW Contributed capital (see above) Cash to be invested
P725,600
P906,675 1/3 P302,225 _121,150 P181,075
3-20: a Capital balances Understatement of assets, P12,000 Balances before settlement to A
A P 20,750 __3,000 P 23,750
Settlement to A A’s interest (23,750+5,000) Partial Goodwill to A
P 30,250 _28,750 P 1,500
B P 19,250 __3,000 P 22,250
Therefore: 1. Under partial Goodwill method the capital balances of B is P 22,250 2. Under Bonus method the capital balances of B would be: B, capital balances before settlement to A P 22,250 Bonus to A (1,500X25/75) _( 500) B, capital after retirement of A P 21,750
C P 45,000 __6,000 P 51,000
Partnership Dissolution – Changes in Ownership
47
3-21: a Capital balances Net income, P140,000 Undervaluation of inventory, P20,000 Capital balances before settlement to Perez Settlement to Perez Bonus to Perez Capital balances after retirement
Perez P 100,000 70,000 ___10,000 P 180,000 ( 195,000) ___15,000 P –
Reyes Suarez P 150,000 P 200,000 42,000 28,000 ____6,000 ____4,000 P 198,000 P 232,000 – – _( 9,000) _( 6,000) P 189,000 P 226,000
Capital balances Settlement to Ely Total Goodwill (P40,000/50%)P80,000 Capital balances after retirement of Ely
ELY FLOR GLOR P 320,000 P 192,000 P 128,000 ( 360,000) – – __40,000 ___24,000 ___16,000 P – P 216,000 P 144,000
3-22: c
3-23: c Capital balance 3/1/07 Net loss-2007: Salary (10 months) Interest (10 months) Bal. beg. cap. ratio: 48:24 Total Capital balance Drawings Capital balance, 12/31/07 Net profit- 2008: Salary Interest Balance, equally Total Capital balance Drawings Capital balance 12/31/08
_Alma_ 480,000
_Betty_ 240,000
480,000 40,000 ( 544,000) ( 24,000) 456,000 ( 24,000) 432,000
240,000 20,000 ( 272,000) ( 12,000) 228,000 ( 24,000) 204,000
720,000 60,000 ( 816,000) ( 36,000) 684,000 ( 48,000) 636,000
576,000 43,200 ( 397,800) 221,400 653,400 ( 24,000) 629,400
288,000 20,400 ( 397,800) ( 89,400) 114,600 ( 24,000) 90,600
864,000 63,600 ( 795,600) 132,000 768,000 ( 48,000) 720,000
Total contributed capital (720,000 + 400,000) Cora’s interest Cora’s agreed capital Cora’s contributed capital Bonus to Cora, from Alma and Betty 4:2 Therefore entry (c) is correct
_Total_ 720,000
1,120,000 40% 448,000 400,000 48,000

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