Assuming the old partners will continue to participate their share in the original ratios. How much is the share of Sia and May in the total partnership profit?
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.
Partners S, M, and Y share
Sia, Capital-------- P 80,000
May, Capital------- 40,000
Yen, Capital-------- 30,000
Total -------------- P150,000
The assets and liabilities are recorded and presented at their respective fair values. On Oct. 31, 2021, Gin is to be admitted as a new partner with a 15% capital interest and a 20% share in profits and losses in exchange for a 30,000 cash contribution. The new partnership will begin with a total capital of P180,000.
The partnership evenly earned 2,400,000 (200,000 per month) throughout the year ending on Dec. 31, 2021. Assuming the old partners will continue to participate their share in the original ratios. How much is the share of Sia and May in the total partnership profit?
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