A partnership has total equity of $464,000. Partnership equity consists of Green, Capital, $324,000, and Tan, Capital, $140,000. Net income and loss is shared in a ratio of 85% to Green and 15% to Tan. On December 1, the partnership accepts Brown as a new partner. Record the entry for Brown's admission under each separate situation. 1. Record the admission assuming Brown makes an investment of $118,000 cash for a 20% interest in equity and a 20% share of any income or loss. 2. Record the admission assuming Brown makes an investment of $161,000 cash for a 20% interest in equity and a 20% share of any income or loss. 3. Record the admission assuming Brown makes an investment of $84,000 cash for a 20% interest in equity and a 20% share in any income or loss.
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.
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