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Palatino paid Mallari P250,000 for 50% of his interest. Palatino invested P250,000 for a one-fourth interest in the partnership. Palatino invested P250,000 for a 30% interest in the partnership.

Palatino paid Mallari P250,000 for 50% of his interest. Palatino invested P250,000 for a one-fourth interest in the partnership. Palatino invested P250,000 for a 30% interest in the partnership.

SWFT Comprehensive Volume 2019
SWFT Comprehensive Volume 2019
42nd Edition
ISBN:9780357233306
Author:Maloney
Publisher:Maloney
Chapter21: Partnerships
Section: Chapter Questions
Problem 57P
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Problem #1

Admission by Purchase of Interest or Investment of Assets

Mallari and Chua are partners who share profits and losses in a ratio of 3:2, respectively. They have the following capital balances on Sept. 30, 2019:

                                                Mallari, Capital                                  Chua, Capital

                                                  P250,000 Cr.                                       P500,000 Cr.

The partners agreed to admit Palatino to the partnership.

Required: Calculate the capital balances of each partner after the admission of Palatino, assuming that bonuses are recorded when appropriate for each of the following assumptions:

  1. Palatino paid Mallari P250,000 for 50% of his interest.
  2. Palatino invested P250,000 for a one-fourth interest in the partnership.
  3. Palatino invested P250,000 for a 30% interest in the partnership.
  4. Palatino invested P250,000 for a 20% interest in the partnership.
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