Answered: Liz. Bob, and Alex are partners in a…

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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Liz. Bob, and Alex are partners in a company that is being liquidated. They share profits and losses 30 percent, 45 percent, and 25 percent, respectively. When the liquidation begins they have capital account balances of P20,000, P30,000, and P15,000, respectively. The partnership just incurred liquidation expenses of P30,000 and sold equipment with a book value of P90,000 for P50,000. What is the balance in Liz's capital account after these transactions are completed?

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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