Alden and Maine are partners with capital balances of P 1,000,000 each, sharing income and losses in a 3:2 ratio. The partners have been considering Doris' proposal to invest P 1,000,000 cash for a 1/3 share in the partnership. The following questions were brought up by the partners who sought your advice on whether to admit Doris in the partnership: A. If Doris' proposal is accepted what will be the effect on the profit and loss ratio? B. If a net income of P 600,000 will be earned by the firm after a year, what would be their profit shares? C. If the P 600,000 net income could be earned by the firm without the additional investment, who would benefit least with the proposal? D. If the firm could earn only P 450,00o, without additional investment, would the proposal be still attractive to Alden?

Alden and Maine are partners with capital balances of P 1,000,000 each, sharing income and losses in a 3:2 ratio. The partners have been considering Doris' proposal to invest P 1,000,000 cash for a 1/3 share in the partnership. The following questions were brought up by the partners who sought your advice on whether to admit Doris in the partnership: A. If Doris' proposal is accepted what will be the effect on the profit and loss ratio? B. If a net income of P 600,000 will be earned by the firm after a year, what would be their profit shares? C. If the P 600,000 net income could be earned by the firm without the additional investment, who would benefit least with the proposal? D. If the firm could earn only P 450,00o, without additional investment, would the proposal be still attractive to Alden?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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