4.3 The Capital of bah and Rah are as follows: Bah 25, 000 Rah 15,000 They share profits equally. Kuh will buy 1/5 the interest and earnings of Bah for 8,000 and Dah will buy 1/2 the interest and earnings of Rah for 7,000. REQUIRED: a. Entry to record the admission of the new partners. b. What is the interest of each partner in the new partnership? c. What is the new profit and loss sharing ratio?
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is 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, drawings of a partner, etc.
4.3 The Capital of bah and Rah are as follows:
Bah 25, 000
Rah 15,000
They share profits equally.
Kuh will buy 1/5 the interest and earnings of Bah for 8,000 and Dah will buy 1/2 the interest and earnings of Rah for 7,000.
REQUIRED:
a. Entry to record the admission of the new partners.
b. What is the interest of each partner in the new partnership?
c. What is the new
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