Allen, Barkley and Charles, partners of ABC Enterprises, have agreed on a profit and loss ratio of 3:3:4, respectively. On December 31, 2016, the partnership books showed the following capital balances: Allen - P 450,000; Barkley-P 540,000; Charles-P 900,000 On January 1, 2017, Derek was admitted as a new partner under the following terms and conditions: a. b. Derek will share % (25%) in the profit and loss ratio, while the ratio of the original partners will remain proportionately the same as before Derek's admission. Derek will purchase 1/6 of Barkley's interest paying him P 75,000. c. d. Derek will contribute P 450,000 in cash to the partnership. Total partnership capital after Derek's admission will be P 2,400,000 (AC) of which Derek's capital interest will be P 480,000.(ACNP) Instructions: 1. Using the format below, prepare a schedule showing the capital of each partner before and after the admission of Derek. Allen Barkley Charles Derek Total Capital balances before the admission of Derek P 450,000 P 540,000 P 900,000 P 1,890,000 2. What is the profit and loss ratio of all the partners after Derek's admission?

Allen, Barkley and Charles, partners of ABC Enterprises, have agreed on a profit and loss ratio of 3:3:4, respectively. On December 31, 2016, the partnership books showed the following capital balances: Allen - P 450,000; Barkley-P 540,000; Charles-P 900,000 On January 1, 2017, Derek was admitted as a new partner under the following terms and conditions: a. b. Derek will share % (25%) in the profit and loss ratio, while the ratio of the original partners will remain proportionately the same as before Derek's admission. Derek will purchase 1/6 of Barkley's interest paying him P 75,000. c. d. Derek will contribute P 450,000 in cash to the partnership. Total partnership capital after Derek's admission will be P 2,400,000 (AC) of which Derek's capital interest will be P 480,000.(ACNP) Instructions: 1. Using the format below, prepare a schedule showing the capital of each partner before and after the admission of Derek. Allen Barkley Charles Derek Total Capital balances before the admission of Derek P 450,000 P 540,000 P 900,000 P 1,890,000 2. What is the profit and loss ratio of all the partners after Derek's admission?

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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