Answered: capital balance of Kris after Kelly's…

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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The partnership of Kris, Erich and Eunice reflected beginning capital balances of 75,000; 25,000 and 100,000 and profit and loss ratios of 5:4:1 to Kris, Erich and Eunice, respectively. The partners plan to dissolve their business and admit Kelly into the new partnership. Kelly is to invest 25,000 for a 10% interest in the new partnership and is to be credited the same amount of capital in the new partnership. Determine the capital balance of Kris after Kelly's admission into the partnership.

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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