Answered: Lima and Mitra are partners with a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Lima and Mitra are partners with a profit and loss ratio of 75:25 and capital balances of P100,000 and P50,000 respectively. Nova is to be admitted into the partnership by purchasing a 20% interest in the capital, profits and losses for P60,000.

Assuming that no asset revaluation is to be made, the capital balances of Lima, and Mitra after the admission of Nova are

Lima, P112,000 and Mitra, P38,000

Lima, P100,000 and Mitra, P50,000

Lima, P120,000 and Mitra, P60,000

Lima, P80,000 and Mitra, P40,000.

Assuming that asset revaluation is to be made, the capital balances of Lima, Mitra and Nova are

P170,000; P70,000; P60,000

P192,500; P77,500; P30,000

P100,000; P50,000; P60,000

P800,000; P40,000; P30,000

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.

Expert Solution

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions