Bill, Bob, and Bo, are partners in the Trendy Company, a retailer of inexpensive kids' wear. They share profits and losses in a 1:4:5 ratio and have decided to expand their business territory. They have agreed to admit Burt to the partnership for a cash investment. Their capital balances are currently P60,000, P100,000, and P140,000, respectively. Burt has been offered a 15% interest in the firm for P130,000. Assuming Burt takes the offer, the entry to record his investment in the partnership includes a: a. credit to gain on sale of partnership interest for P85,000 b. debit to Burt, capital for P45,000 c. credit to Burt, capital for P45,000 d. debit to cash for P130,000
Bill, Bob, and Bo, are partners in the Trendy Company, a retailer of inexpensive kids' wear. They share profits and losses in a 1:4:5 ratio and have decided to expand their business territory. They have agreed to admit Burt to the partnership for a cash investment. Their capital balances are currently P60,000, P100,000, and P140,000, respectively. Burt has been offered a 15% interest in the firm for P130,000. Assuming Burt takes the offer, the entry to record his investment in the partnership includes a: a. credit to gain on sale of partnership interest for P85,000 b. debit to Burt, capital for P45,000 c. credit to Burt, capital for P45,000 d. debit to cash for P130,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Bill, Bob, and Bo, are partners in the Trendy Company, a retailer of inexpensive kids' wear. They share profits and losses in a 1:4:5 ratio and have decided to expand their business territory. They have agreed to admit Burt to the partnership for a cash investment. Their capital balances are currently P60,000, P100,000, and P140,000, respectively.
Burt has been offered a 15% interest in the firm for P130,000. Assuming Burt takes the offer, the entry to record his investment in the partnership includes a:
a. credit to gain on sale of partnership interest for P85,000
b. debit to Burt, capital for P45,000
c. credit to Burt, capital for P45,000
d. debit to cash for P130,000
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