AA, BB and CC are partners sharing profits in a 5:3:2 ratio, and with capital balances of P95,000, P80,000 and P60,000, respectively on December 31, 2015. The partners decided to admit DD as a new partner on January 1, 2015. DD will contribute cash of P80,000 to the partnership and also pay P10,000 for 15% of BB’s share. DD is to have a 20% share in profits. After the admission of DD, the total capital will be P330,000 and DD’s capital will be P70,000. After the admission of DD, BB’s capital balance would be: A. 72,600 C. 79,100 B. 74,600 D. 81,100
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.
AA, BB and CC are partners sharing profits in a 5:3:2 ratio, and with capital balances of
P95,000, P80,000 and P60,000, respectively on December 31, 2015. The partners
decided to admit DD as a new partner on January 1, 2015. DD will contribute cash of
P80,000 to the partnership and also pay P10,000 for 15% of BB’s share. DD is to have a
20% share in profits. After the admission of DD, the total capital will be P330,000 and
DD’s capital will be P70,000.
After the admission of DD, BB’s capital balance would be:
A. 72,600
C. 79,100
B. 74,600
D. 81,100
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