Mimi and Gigi are partners sharing profits and losses in the ratio of 2:3 with capitals of 9,000 and 15,000, respectively. Lulu is to be admitted into the partnership after which they will share profits and losses equally. The books of the old partnership will still be use by the new partnership. REQUIRED: Give the entry to record the admission of Lulu under each of the following independent assumptions. Show also the comparative capital structure and interest of each partner in relation to the total capital before and after the admission of Lulu. a. Lulu buys 1/4 the interest of Mimi for 3,000. b. Lulu buys 1/5 the interest of Gigi for 2,000. c. Lulu buys 1/2 the interest of Mimi for 5,000 and 1/4 the interest of Gigi for 6,000.
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.
4.1 Mimi and Gigi are partners sharing
REQUIRED: Give the entry to record the admission of Lulu under each of the following independent assumptions. Show also the comparative capital structure and interest of each partner in relation to the total capital before and after the admission of Lulu.
a. Lulu buys 1/4 the interest of Mimi for 3,000.
b. Lulu buys 1/5 the interest of Gigi for 2,000.
c. Lulu buys 1/2 the interest of Mimi for 5,000 and 1/4 the interest of Gigi for 6,000.
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