Instructions: Answer the following problems by determining the capital balance of each partner after dissolution, providing the journal entry and showing your solution. [WITHDRAWAL, RETIREMENT, OR DEATH OF A PARTNER] Partners A, B, and C has the following capital balances on Jan. 1, 2023: A, capital (50%) P320,000 B, capital (30%) P192,000 C, capital (20%) P128,000 Partner A decided to retire on Sept. 1, 2023. The partnership earned profit of P800,000 from Jan. 1 to Aug 31, 2021 and the partners has the following capital withdrawals during the period: A, P40,000; B, P60,000; and C, P30,000. Case #1: Partner B purchases Partner A’s interest for P700,000. Case #2: The partnership pays Partner A P700,000 for his interest Case #3: The partnership pays Partner A P650,000 for his capital.
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.
Instructions:
Answer the following problems by determining the capital balance of each
partner after dissolution, providing the
[WITHDRAWAL, RETIREMENT, OR DEATH OF A PARTNER]
Partners A, B, and C has the following capital balances on Jan. 1, 2023:
A, capital (50%) P320,000
B, capital (30%) P192,000
C, capital (20%) P128,000
Partner A decided to retire on Sept. 1, 2023. The partnership earned profit of P800,000 from Jan. 1 to Aug 31, 2021 and the partners has the following capital withdrawals during the period: A, P40,000; B, P60,000; and C, P30,000.
Case #1: Partner B purchases Partner A’s interest for P700,000.
Case #2: The partnership pays Partner A P700,000 for his interest
Case #3: The partnership pays Partner A P650,000 for his capital.
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