he condensed Statement of Financial Position of the partnership of Buenaflor and Gangoso as of December 31, 2018 showed the following:
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.
- The partner’s capital (income-sharing ratio in parentheses) of Rivadelo, Del Mundo, Galvan and Samson on May 31, 2018, was as follows:
Rivadelo (20%) P 60,000
Del Mundo (20%) 80,000
Galvan (20%) 70,000
Samson (40%) 40,000
Total Partners’ Capital P 250,000
On May 31, 2018, with the consent of Rivadelo, Del Mundo, and Samson:
- Galvan retired from the
partnership and was paid P50,000 cash in full settlement of his interest in the partnership. - Mamitag was admitted to the partnership with a P20,000 cash investment for a 10% interest in the net assets of the partnership. No
goodwill will be recognized.
Prepare the
- The condensed Statement of Financial Position of the partnership of Buenaflor and Gangoso as of December 31, 2018 showed the following:
Total Assets P 200,000
Total Liabilities 40,000
Buenaflor, Capital 80,000
Gangoso, Capital 80,000
On this date, the partnership was dissolved and its net assets transferred to a newly-formed corporation. The fair value of the assets was P24,000 more than the carrying value on the firm’s books. Each of the partners was issued 10,000 shares of the corporation’s P1 par ordinary share.
Prepare the journal entries in the books of the corporation.
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