A and B decided to form a partnership on January I, 2021. Their Statements of Financial Position on this date were: A B Cash 62,625 164,063 Accounts Receivable 1,487,500 896,875 Merchandise Inventory 875,000 885,938 Equipment 656,250 1,268,750 Total 3,084,375 3,215,625 A B Accounts payable 459,375 1,159,375 A, Capital 2,625,000 B, Capital 2,056,250 Total 3,084,375 3,215,625 They agreed the following adjustments shall be made: - Equipment of A is under depreciated by P87,500 and that B is over depreciated by P131,250. - Allowance for doubtful accounts is to be set up amounting to P297,500 for A and P196,875 for B. - Inventories of P21, 875 and P15,312 are worthless in the books of A and B respectively. - The partnership agreement provides for a profit and loss ratio of 70% to A and 30% to B Compute for the total assets of the partnership
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.
A and B decided to form a
Financial Position
| A | B | |
| Cash | 62,625 | 164,063 |
| 1,487,500 | 896,875 | |
| Merchandise Inventory | 875,000 | 885,938 |
| Equipment | 656,250 | 1,268,750 |
| Total | 3,084,375 | 3,215,625 |
| A | B | |
| Accounts payable | 459,375 | 1,159,375 |
| A, Capital | 2,625,000 | |
| B, Capital | 2,056,250 | |
| Total | 3,084,375 | 3,215,625 |
They agreed the following adjustments shall be made:
- Equipment of A is under
P131,250.
- Allowance for doubtful accounts is to be set up amounting to P297,500 for A and
P196,875 for B.
- Inventories of P21, 875 and P15,312 are worthless in the books of A and B
respectively.
- The partnership agreement provides for a
to B
Compute for the total assets of the partnership
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