Assets

Cash ................................................. Php 5,000.00

Noncash assets ...................................... 65,000.00

XX, load .................................................... 5,000.00

Total............................................. Php75,000.00

Liabilities and Capital

Liabilities ..........................................Php15,000.00

XX, capital (80%) ................................... 40,000.00

YY, capital (20%) ....................................20,000.00

Total............................................. Php75,000.00

The percentage in the parentheses after the partner's capital balances represents their respective interest in the profits and losses. The partners agree to admit ZZ as a member of the firm

Situation 1: ZZ purchases a interest in the firm. One-fourth of each partner's capital is to be transferred to the new partner. ZZ pays the partners Php15,000 which is divided between them in the proportion to the equities given up.

QUESTION 1

The Capital balances of XX, YY and ZZ after the admission should be

XX YY ZZ

A. 30,000 15,000 18,750

B. 25.000 25,000 25,000

C. 30,000 15,000 15,000

D 20,000 20,000 20,000

Situation 2: ZZinvests Php20,000 in the cash for ownership interest. The money goes to the original partners.

QUESTION 2

The capital balances of XX YY ZZ is

XX YY ZZ

A. 30,000 15,000 18,750

B. 25.000 25,000 25,000

C. 30,000 15,000 15,000

D 20,000 20,000 20,000

QUESTION 3

SAME SITUATION. the partnership gain to be recognized in the partnership books is

a. 0

b. 1,250

c. 5,000

d., 20, 000

QUESTION 4

SAME SITUATION. The gain to be recognized on by XX and YY

a. 0

b. 1,250

c. 5,000

d. 20,000

Situation 3: ZZ purchases a interest in the firm. One-fourth of each partner's capital is to be transferred to the new partner. ZZ pays partners Php12,000, which is divided between them in proportion to the equities given up.

QUESTION 5

The capital balances of XX, YY, ZZ after the admission if the book value method (no adjustment/ no revaluation)method is used should be:

XX YY ZZ

A. 30,000 15,000 18,750

B. 25.000 25,000 25,000

C. 30,000 15,000 15,000

D 20,000 20,000 20,000

QUESTION 6

If revaluation/adjustment in assets are recognized, the capital balances of XX, YY and ZZ after admission should be

XX YY ZZ

A. 30,000 15,000 18,750

B. 25.000 25,000 25,000

C. 30,000 15,000 15,000

D 20,000 20,000 20,000

SITUATION 4 : ZZ invests Php40,000 in the firm and is allowed a credit of Php12,000 for goodwill upon admission.

QUESTION 7

XX YY ZZ

A.32000 18000 30000

B. 48000 22000 30000

C. 40,000 20000 52000

D 42,000 22000 52000