Reference no: EM132786894

Wally, Willie, and Watson formed a partnership several years ago. Wally has decided to withdraw from the partnership. The current capital balances are: Wally, capital, Php50,000; Willie, capital, Php65,000; and Watson, capital, Php100,000. Prior to the withdrawal of Wally, the partners agree to revalue some of the partnership assets. Inventory with a cost of Php120,000 has a current market value of Php150,000; land with a cost of Php50,000 has a current market value of Php125,000. Wally, Willie, and Watson share net income and losses in a 3:3:4 ratio. Willie and Watson will share net income in a 3:4 ratio.

Problem 1: What is the balance in Wally's capital account after revaluing the assets?

a) Php81,500

b) Php18,500

c) Php92,000

d) Php8,000

Problem 2: What is total capital for the partnership after revaluing the assets?

a) Php215,000

b) Php320,000

c) Php110,000

d) cannot be determined using the given information

Problem 3: Wally withdraws from the partnership and accepts Php80,000 cash. Assuming the assets have been properly revalued, the entry to withdraw Wally from the partnership includes a:

a. debit to Wally, capital for Php80,000

b. credit to Watson, capital for Php857

c. debit to Watson, capital for Php857

d. debit to Willie, capital for Php643

Problem 4: Wally withdraws from the partnership and accepts Php60,000 cash. Assuming the assets have been properly revalued, the entry to withdraw Wally from the partnership would include a debit to:

a. Wally, capital for Php60,000

b. Willie, capital for Php9,214

c. Wally, capital for Php81,500

d. Watson, capital for Php12,286