University of the East, Manila

ACCOUNTING 1201

Fiona and Gary are partners with capital balances of P350,000 and P250,000, respectively. They agree to
accept Romy who will contribute land which cost him P250,000 but its market value is P300,000.
Direction:
a) Romy will be given a 1/3 interest in the firm. No bonus or asset should be recognized.
TCC TAC OLD NEW
Fiona ₱350,000.00 ₱350,000.00 58% 39% 67%
Gary ₱250,000.00 ₱250,000.00 42% 28%
Romy ₱300,000.00 33%
Total ₱600,000.00 ₱900,000.00 100% 100%
Entry: Cash ₱300,000.00
Romy, Capital ₱300,000.00
To admit 33% interest of Romy to the partnership.
b. Romy will be given a 40% interest. Use the bonus capital method.
TCC TAC BONUS OLD NEW
Fiona ₱350,000.00 ₱315,000.00 -₱35,000.00 58% 35%
Gary ₱250,000.00 ₱225,000.00 -₱25,000.00 42% 25%
Romy ₱300,000.00 < ₱360,000.00 ₱60,000.00 40%
Total ₱900,000.00 = ₱900,000.00 ₱0.00 100% 100%
Entry: Cash ₱300,000.00
Fiona, Capital ₱35,000.00
Gary, Capital ₱25,000.00
Romy, Capital ₱360,000.00
To admit 40% interest of Romy to the partnership and to distribute bonus from the existing
partners.