Answered: A and B are partners with the following…

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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A and B are partners with the following capital balances and profit-sharing percentages: A (40%) ₱750,000 and B (60%) ₱1,050,000. A and B admitted C into the partnership when C purchased 20% of the capital interests of A and B for ₱400,000. The partnership’s net assets on C’s admission date were fairly valued. How much is the total equity of the partnership immediately after the admission of C?

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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