Allen, Barkley and Charles, partners of ABC Enterprises, have agreed on a profit and loss ratio of3:3:4, respectively. On December 31, 2016, the partnership books showed the following capitalbalances:Allen - P 450,000;Barkley - P 540,000;Charles – P 900,000On January 1, 2017, Derek was admitted as a new partner under the following terms andconditions:Derek will share % (25%) in the profit and loss ratio, while the ratio of the original partnerswill remain proportionately the same as before Derek's admission.a.b.Derek will purchase 1/6 of Barkley's interest paying him P 75,000.C.Derek will contribute P 450,000 in cash to the partnership.Total partnership capital after Derek's admission will be P 2,400,000 (AC) of which Derek'scapital interest will be P 480,000.(ACNP)d.2.What is the profit and loss ratio of all the partners after Derek's admission?

Calculation of profit sharing ratio on admission of new partner in partnership firm

Answered: 2. What is the profit and loss ratio of…

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2. What is the profit and loss ratio of all the partners after Derek's admission?

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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Question

Allen, Barkley and Charles, partners of ABC Enterprises, have agreed on a profit and loss ratio of
3:3:4, respectively. On December 31, 2016, the partnership books showed the following capital
balances:
Allen - P 450,000;
Barkley - P 540,000;
Charles – P 900,000
On January 1, 2017, Derek was admitted as a new partner under the following terms and
conditions:
Derek will share % (25%) in the profit and loss ratio, while the ratio of the original partners
will remain proportionately the same as before Derek's admission.
a.
b.
Derek will purchase 1/6 of Barkley's interest paying him P 75,000.
C.
Derek will contribute P 450,000 in cash to the partnership.
Total partnership capital after Derek's admission will be P 2,400,000 (AC) of which Derek's
capital interest will be P 480,000.(ACNP)
d.
2.
What is the profit and loss ratio of all the partners after Derek's admission?

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