AA, BB and CC are partners with capital balances of P392,000, P1,365,000 and P595,000 respectively, sharing profits and losses in the ratio of 3:2:1. DD is admitted as a new partner bringing with him expertise and is to invest cash for a 25% interest in the partnership which includes a credit of P367,500 for bonus upon his admission. How much cash should DD contribute?

AA, BB and CC are partners with capital balances of P392,000, P1,365,000 and P595,000 respectively, sharing profits and losses in the ratio of 3:2:1. DD is admitted as a new partner bringing with him expertise and is to invest cash for a 25% interest in the partnership which includes a credit of P367,500 for bonus upon his admission. How much cash should DD contribute?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter15: Partnership Accounting

Section: Chapter Questions

Problem 2PA: Arun and Margot want to admit Tammy as a third partner for their partnership. Their capital balances...

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Arun and Margot want to admit Tammy as a third partner for their partnership. Their capital balances prior to Tammys admission are $50,000 each. Prepare a schedule showing how the bonus should be divided among the three, assuming the profit or loss agreement will be 1:3 once Tammy has been admitted and her contribution is: A. $20,000 B. $80,000 C. $50,000. In addition, show the resulting journal entries to each of the three partners capital accounts.
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