Problem 1.

Khalyl Dionne formed a partnership with Khyle Lorenz on a business dealing with motorcycle parts in Mandaue City. Their capital balances as of this date follows:

Khalyl Dionne 300,000

Khyle Lorenz 600,000

TOTAL 900,000

Irene Mosqueda, a prospective business associate offers to buy 1/4 of the partnership interest for 255,000. The old profit and loss ratio of the partners is 45%-55% after which, they will again have to provide a new basis for profit distribution.

Required:

1. How much is the book value of the partnership interest acquired by Mosqueda?_________
2. How much is the gain or loss on the sales transactions?________

Problem 2.

Khyle and Lorenz are partners who shared profit and loss on a 3:2 basis. They wished to expand their business, so they invited Khalyl to join with them by allowing her to invest cash of 100,000 and equipment with a fair market value of 120,000 (net book value of equipment was 80,000) for a 1/4 interest of the firm. The details of their respective capital accounts follow:

Cash 240,000

Other Assets 480,000

Khyle, Capital 400,000

Lorenz, Capital 320,000

Required:

1. Capital balances of the partners after admission:

Khyle_______ Lorenz_______ Khalyl________

Problem 3.

Mae Daval and Aireen Isagan, partners of Zamboanga Flower Garden have invited Luz Silorio to join with them in their venture. The following account balances were taken from their records on July 31, 2009:

Cash 720,000

Accounts Receivable 90,000

Allowance for Doubtful Accts 15,000

Notes Receivable 30,000

Merchandise 240,000

Furniture and Equipment 150,000

Accumulated Depreciation 54,000

Accounts Payable 120,000

Daval, Capital (50%) 540,000

Isagan, Capital (50%) 501,000

It was agreed the following adjustments are to be reflected in the partnership book before the admission of Luz Silorio.

a. The provision for Doubtful Accts should be brought down to 10% of the outstanding receivable acct.

b. Merchandise is expected to realize at 90% of its book value

c. Furniture and Equipment valuation account should be adjusted to 60,000

d. Payment of Account to a supplier in the amount 21,000 which was inadvertently omitted should be recorded

e. Unused supplies costing 15,000 was not yet taken up. (The whole amount of supplies has been charged to expenses)

f. Unearned portion of Interest Income collected in advance on Notes Receivable amounting to 300 was not yet taken up (Interest collected in advance was charged to Interest Income)

Silorio will contribute cash equal to 1/2 of the partner's equities after the adjustments. They will later decide on their P/L sharing ratio.

Required:

1. Adjusted capital balance of Daval_______
2. Cash to be contributed by Silorio upon admission________