Answered: 1. How much was the loss on…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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_{Cara and David are partners with capital balances of P98,000 and P62,000, respectively. They share profits and losses in the ratio of 3:2, respectively. The partners decide to liquidate the partnership. The firm's liabilities amount to P144,000, including P16,000 owing to Cara and P14,000 owing to D. After realization of assets, the cash on hand amounted to P150,000.}

_{1. How much was the loss on realization?}

_{2. How much should Cara and David receive in final settlement of their respective interest?}

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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