RPCPA Adapted Problems

These problems are lifted from the actual CPA Board Exam.

Problem I

Mark, Nark and Oark are partners sharing profit in a 5:3:2 ratio, and with capital balances of P 95,000, P 80,000, and P 60,000, respectively, on December 31, 2015.  The partners decided to admit Park as a new partner on January 1, 2016.  Park will contribute cash of P 80,000 to the partnership and also pay P 15,000 for 15% of Nark's share.  Park is to have a 20% interest share in profits.  After the admission of Park, the total capital will be P 330,000 and Park's capital will be P 70,000
Question # 1 Assuming inventory is to be revalued, how much should be the amount to be adjusted in the capital of the old partners?

Question # 2 What amount should be deducted from the capital of Nark as a result of the purchase of  interest by Park?

Question # 3  What is the capital balance of Mark after the admission of Park?

Problem II

Tito and Vic are partners with capitals of P 200,000 and P 100,000 and sharing profits and losses at 3:1, respectively.  They decided to admit Joey as a new partner with a 50% interest in the firm.  Joey invested cash of P 150,000 and Tito and Vic transferred portions of their capitals as a bonus to Joey.

Question # 1 What is the capital balance to be credited to Joey?

Question # 2 How much should be the balance of the capital of Vic after admission of Joey?

Question # 3 Assuming total liabilities prior to the admission of Joey amounted to P 150,000, compute the total assets of the partnership after the admission of Joey.