Answered: Bingham and Ecuyer sell 1/4 of their…

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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Bingham and Ecuyer sell 1/4 of their partnership interest to Ives receiving $600,000 each. At the time of admission, Bingham and Ecuyer each had a $1,050,000 capital balance. The admission of Ives will cause the net partnership assets to

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a. increase by $1,200,000. b. remain at $3,300,000. c. decrease by $1,200,000. d. remain at $2,100,000.

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Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement 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, and drawings of a partner.

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