A, B and C are partners with the following P/L ratio and capital balances: A (60%) P100,000; B(30%) P60,000; and C (10%) P20,000. Case 3: D invests P70,000 cash for a 20% interest in the partnership’s net assets and profits. Provide the journal entry and determine the capital balances and P/L ratio of the partners after D’s admission. Explain where the amounts came from and the answers.
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, B and C are partners with the following P/L ratio and capital balances: A (60%) P100,000; B(30%) P60,000; and C (10%) P20,000.
Case 3: D invests P70,000 cash for a 20% interest in the
Explain where the amounts came from and the answers.
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