One, Two and Three were partners with capital balances on January 2, 20x10 of P100,000; P150,000 and P200,000 each respectively. Their profit ratio is 5:3:2 while their capital interest ratio is 4:4:2. On July 1, 20x10, Four was admitted by the partnership for 20% interest in capital and 25% in profits by contributing P25,000 cash and the old partners agree to bring their interest to their old capital ratio. The partnership had net income of P60,000 before admission of Four and the partners agree to revalue its undervalued equipment by P10,000. The capital balance of Two after the admission of Four would be:
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.
One, Two and Three were partners with capital balances on January 2, 20x10 of P100,000; P150,000 and P200,000 each respectively. Their profit ratio is 5:3:2 while their capital interest ratio is 4:4:2. On July 1, 20x10, Four was admitted by the partnership for 20% interest in capital and 25% in profits by contributing P25,000 cash and the old partners agree to bring their interest to their old capital ratio. The partnership had net income of P60,000 before admission of Four and the partners agree to revalue its undervalued equipment by P10,000. The capital balance of Two after the admission of Four would be:
Step by step
Solved in 3 steps
