Question:
Claire, Dolly and Ellery formed the CDE Partnership on September 1, 2016, with the
following assets, measured at book values in their respective records, contributed by each
partner:
CLAIRE DOLLY ELLERY
Cash 486,000 460,107 231,903
Accounts Receivable 109,620 - 141,000
Property, Plant and Equipment 2,094,390 450,000 -
A part of Claire's cash contribution, P324,000, comes from personal borrowings. Also,
PPE of Claire and Dolly are mortgaged with the bank for P1,458,000 and P108,000,
respectively. The partnership is to assume responsibility for these PPE mortgages. The
fair value of the accounts receivable contributed by Ellery is P137,000 while the PPE
contributed by Dolly at this date is P510,300. The partners have agreed to share interests
on a 5:3:2 ratio, to Claire, Dolly and Ellery, respectively.
Required: Use Bonus and Goodwill Method in computing the Capital balances of Claire,
Dolly and Ellery.
Answer:
Claire Dolly Ellery
Cash 486,000 Cash 460,107 Cash 231,903
Claire, Capital 486,000 Dolly, Capital 460,107 Ellery, Capital 231,903
AR 109,620 PPE 510,300 AR 137,000
Claire, Capital 109,620 MP 108,000 Ellery, Capital 137,000
Dolly, Capital 402,300
PPE 2,094,390
MP 1,458,000
Claire, Capital 636,390
Account Titles BV Adjustments FV
Claire Dolly Ellery Claire Dolly Ellery
Cash 486,000 460,107 231,903 486,000 460,107 231,903
AR 109,620 137,000 109,620 137,000
PPE 2,094,390 510,300 2,094,390 510,300
Mortgage 1,458,000 108,000 1,458,000 108,000
1,232,010 862,407 368,903
Closing Entries
Claire Dolly Ellery
Mortgage 1,458,000 Mortgage 108,000 Ellery, Capital 368,903
Claire, Capital 1,232,010 Dolly, Capital 862,407 Cash 231,90
Cash 486,000 Cash 460,107 AR 137,00
AR 109,620 PPE 510,300
PPE 2,094,390
Opening the Partnership
Cash 1,178,010
AR 246,620
PPE 2,604,690
Mortgage 1,566,000
Claire, Capital 1,232,010
Dolly, Capital 862,407
Ellery, Capital 368,903
Claire, Dolly and Ellery formed the CDE Partnership on September 1, 2016, with the
following assets, measured at book values in their respective records, contributed by each
partner:
CLAIRE DOLLY ELLERY
Cash 486,000 460,107 231,903
Accounts Receivable 109,620 - 141,000
Property, Plant and Equipment 2,094,390 450,000 -
A part of Claire's cash contribution, P324,000, comes from personal borrowings. Also,
PPE of Claire and Dolly are mortgaged with the bank for P1,458,000 and P108,000,
respectively. The partnership is to assume responsibility for these PPE mortgages. The
fair value of the accounts receivable contributed by Ellery is P137,000 while the PPE
contributed by Dolly at this date is P510,300. The partners have agreed to share interests
on a 5:3:2 ratio, to Claire, Dolly and Ellery, respectively.
Required: Use Bonus and Goodwill Method in computing the Capital balances of Claire,
Dolly and Ellery.
Answer:
Claire Dolly Ellery
Cash 486,000 Cash 460,107 Cash 231,903
Claire, Capital 486,000 Dolly, Capital 460,107 Ellery, Capital 231,903
AR 109,620 PPE 510,300 AR 137,000
Claire, Capital 109,620 MP 108,000 Ellery, Capital 137,000
Dolly, Capital 402,300
PPE 2,094,390
MP 1,458,000
Claire, Capital 636,390
Account Titles BV Adjustments FV
Claire Dolly Ellery Claire Dolly Ellery
Cash 486,000 460,107 231,903 486,000 460,107 231,903
AR 109,620 137,000 109,620 137,000
PPE 2,094,390 510,300 2,094,390 510,300
Mortgage 1,458,000 108,000 1,458,000 108,000
1,232,010 862,407 368,903
Closing Entries
Claire Dolly Ellery
Mortgage 1,458,000 Mortgage 108,000 Ellery, Capital 368,903
Claire, Capital 1,232,010 Dolly, Capital 862,407 Cash 231,90
Cash 486,000 Cash 460,107 AR 137,00
AR 109,620 PPE 510,300
PPE 2,094,390
Opening the Partnership
Cash 1,178,010
AR 246,620
PPE 2,604,690
Mortgage 1,566,000
Claire, Capital 1,232,010
Dolly, Capital 862,407
Ellery, Capital 368,903
