Noelle invests $40,000 in the existing partnership in exchange for 20% interest in capital and 20% interest in profits and losses. The exiting partnership is characterized as follows: Existing partners Capital balances % interest in Capital % interest in Profit Santa $50,000 30% 40% Ana $60,000 70% 60% Under the bonus method, how much of capital granted or charged to Santa? Select one: 6,000 granted (credit) 3,000 charged (debit) 3,000 granted (credit) 4,000 granted (credit)
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.
Noelle invests $40,000 in the existing
|
Existing partners |
Capital balances |
% interest in Capital |
% interest in Profit |
|
Santa |
$50,000 |
30% |
40% |
|
Ana |
$60,000 |
70% |
60% |
Under the bonus method, how much of capital granted or charged to Santa?
Select one:
- 6,000 granted (credit)
- 3,000 charged (debit)
- 3,000 granted (credit)
- 4,000 granted (credit)
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