Partnership Dissolution

A partnership dissolution does not automatically lead to liquidation.

• True

• False

In an admission by purchase of interest, the journal entry to record a cash contribution of the new partner is a debit to cash.

• True

• False

In an admission by contribution of asset, the partnership equity will increase.

• True

• False

When the actual contributed capital is not equal with the capital credit, the difference representing a bonus will be distributed to the partners based on their original capital contribution ratio.

• True

• False

When the amount paid by a new partner is different from the amount credited to his/her capital account,

• the difference is a bonus given to the new partner

• the difference is a bonus given to the old partners

• the difference will be debited or credited to the old partners

• the amount needs to be determined first for proper treatment

Which of the following journal entries represent a transfer of interest?

• Dr. A, Capital

  Cr. B, Capital

• Dr. Cash

  Cr. B, Capital

• Dr. Cash

  Cr. A, Capital

  Cr. B, Capital

• Dr. B, Capital

  Cr. Cash

  Cr. Accounts Receivable

Which of the following will not dissolve a partnership?

• When a partner has a debit balance in his capital account

• When a new partner is admitted

• When a partner becomes insane

• When a partner retires from the partnership

When a bonus belongs to the new partner, the old partners' capital accounts

• stay the same

• will be debited

• will be credited

• answer cannot be determined

If a partner retires, can the partnership give him/her assets other than cash?

• No, the capital should always be returned in the form of cash.

• No, the partnership should return what he/she originally invested.

• Yes, provided that the amount received is always equal to the book value of the retiring partner's capital.

• Yes, it is not always cash that can be distributed to the retiring partners.

A, B and C are partners in ABC Partnership with capital balances of P100,000, P100,000 and P50,000 respectively and sharing profits or losses in 2:2:1. With the consent of all the partners, D is admitted by contributing P50,000 in exchange for a 15% interest in the partnership equity. How much will be the capital credit of D upon admission?

• 45,000

• 50,000

• 37,500

• 44,117