Admission of New Partner

Mimi and Gigi are partners sharing profits and losses in the ratio of 2:3 with capitals of P9,000 and P15,000, respectively. Lulu is to be admitted into the partnership after which they will share profits and losses equally. The boos of the old partnership will be used by the new partnership.

Requirement: Give the entry to record the admission of Lulu under each of the following independent assumptions. Also show the comparative capital structure and interest of each partner in relation to the total capital before and after the admission of Lulu.

1.Lulu buys the interest of Mimi for P3,000.

2.Lulu buys 1/5 the interest of Gigi for P2,000.

3.Lulu buys the interest of Mimi for P5,000 and the interest of Gigi for P6,000.

Withdrawal of a Partner

A, B and C are partners with capital balances on December 31, 200D of P450,000 and P300,000, respectively. Profits are shared equally. C wishes to withdraw, and it is agreed that he is to take certain furniture and fixtures at their second-hand value of P18,0000 and note for the balance of his interest. The furniture and fixtures are carried on the books as fully depreciated. Brand new, the furniture and fixtures may cost P30,000. Give the entries necessary to record the withdrawal of C.

Partnership Liquidation

The Braun Company on December 31 has cash P750,000, non-cash assets P5,500,000, liabilities P3,000,000, and the following capital balances. Ho P2,000,000 and Li P1,250,000. The firm is liquidated, and P4,500,000 in cash is received for the non-cash assets. Ho's and Li's income ratios are 60% and 40% respectively.

Requirement:

1.Make a cash distribution schedule.

2.Make the entries to record the following, assuming that the Braun Company decides to liquidate the company.

a.The sale of non-cash assets

b.The allocation of the gain or loss on liquidation to the partners.

c.Payment of Creditors.