Andrew and Jones are partners of Rs. 120,000 and Rs. 80,000 respectively. They share profit and loss in the ratio of 3:2. They agreed to admit Giles as a partner. Required: Give the necessary journal entries and prepare balance sheet in each of the following cases: a) Giles invests Rs. 100,000 cash and receiving a 1/3rd interest. b) Giles invests Rs. 80,000 cash and receiving a 1/4th interest, his capital is to be credited of the entire amount of his investment. c) Giles invests Rs. 40,000 cash for 1/5th interest. Old partners are not ready to reduce their capital balances.
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 5 steps with 11 images
