Nali contributed P24,000 and To contributed P48,000 to form a partnership and they agreed to share profits in the ratio of their original capital contributions. During the first year of operations, they made a profit of P16,
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.
Nali contributed P24,000 and To contributed P48,000 to form a partnership and they agreed to share
profits in the ratio of their original capital contributions. During the first year of operations, they made a
profit of P16,290; Nali withdrew P5,050 and Toh P8,000. At the start of the following year, they agreed
to admit Me into the partnership. Me was to receive a one fourth interest in the capital and profits upon
payment of P30,000 to Nali and Tohh, whose capital accounts were to be reduced by transfers of Me’s
capital account of amounts sufficient to bring them back to their original capital ratio.
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