The capital accounts of A & B Co. before the admission of C are as follows:

Capital Accounts P/L ratios

A, Capital 150,000 30%

B, Capital 250,000 70%

400,000

PART 1: ADMISSION OF A NEW PARTNER

Case 1: Purchase of interest from one another

1. C purchases 10% interest out of the 30% interest of A for P100,000. The net assets of the firm as of this

date approximte their fair values.

Requirement: Provide the journal entry to record the transaction.

Case 2: Purchase of interest from more than one partner

2. C purchases proportionate interest from A and B representing 10% interest in the partnership for

P100,000. The net ssets of the firm as of this date approximte their fair values.

Requirements:

a. provide the journal entry to record the admission of C

b. Compute for the capital balances of the partners after the admission of C.

Case 3: Revaluation

3. C purchases proportionate interest from A and B representing 10% interest in the partnership for

P100,000. However, before the admission of C, it was found out that the building of the partnership

is undervalued by P200,000.

Requirement: Provide the journal entries to record the revaluation of the building and the admission of C

Case 4: Investment to the partnership

4.Disregard

Case# 3 above. C purchases 10% interest in the partnership by investing P100,000 cash to the

business. The net assets of the firm as of this date approximate their fair values.

Requirements:

a. Provide the journal entry to record the admission of C.

b. Compute for the capital balances of the partners after the admission of C.

c. Compute for the new P/L ratios of the partners.

Case 5: Investment to the partnership - Bonus method

5.. Disregard Case# 3 above. C purchases 10% interest in the partnership by investing P100,000 cash to the

business. The partners decided to give C a capital credit of P80,000 to compensate for the old partners'

efforts in establishing the business. The net assets of the firm as of this date approximate their fair values.

Requirements:

a. Provide the journal entry to record the admission of C.

b. Compute for the capital balances of the partners after the admission of C.

Case 6: Amount of investment to the partnership

6.Disregard Case# 3 above. The net assets of the firm as of this date approximate their fair values. If C wants

to invest directly to the business for a 10% interest and no bonus shall be allowed, how much should C invest?

PART 1: WITHDRAWAL OF A PARTNER

Case 7: Purchase of interest by remaining partner.

7.A does not like the ide of admitting C to the partnership. Accordingly, A decided to withdraw from the

partnership and sell his interest to B for P220,000. The net assets of the firm as to this date approximate their

fair values.

Requirements:

a. Provide the journal entry to record A's withdrawal.

Case 8: Purchase of interest by partnership.

'8.A does not like the idea of admitting C to the partnership. Accordingly, A decided to withdraw from the

partnership. The partnership acquires interest of A for P220,000. The net assets of the firm as of this date

approximate their fair values.

Requirements:

a. Provide the journal entry to record A's withdrawal.