After closing the books of the partnership of Mutya and Associates, Lakambini announced his retirement of from the partnership. Shown below are the partners' capital balances and the profit and loss ratio: Capital Balance P 50,000 65,000 40,000 P/L ratio LamAng, Capital Lakandula, Capital Lakambini, Capital LaLuna, Capital 30% 25% 23% 45,000 22% The partners agreed to the following before the cash settlement tolakambini. a. The merchandise inventory will be increased by P4,500 b. Allowance for bad debts will be decreased by P2,100 C. Prepaid insurance worth P1,200 have expired. Instruction: Give the entries to record the following: 1) Adjustments in the books of the partnership 2) Withdrawal of Lakambini from the Partnership assuming the remaining partners will give Lakambini a bonus of P10,000. 3) Withdrawal of Lakambini from the partnership assuming Lakambini receives P5,000 share in asset revaluation.
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.
Step by step
Solved in 2 steps with 4 images
