On January 1, 2014, the partnership decided to admit Nando to the partnership. On that date, Nando invested P100,900 of cash into the partnership for a 20% capital 1. The share of Habagat on the net income of 2013 must be: 2. The capital balance of Maring at the end of 2013: 3. The capital balance of Habagat after Nando's admission must be:
On January 1, 2014, the partnership decided to admit Nando to the partnership. On that date, Nando invested P100,900 of cash into the partnership for a 20% capital 1. The share of Habagat on the net income of 2013 must be: 2. The capital balance of Maring at the end of 2013: 3. The capital balance of Habagat after Nando's admission must be:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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.
Question
Transcribed Image Text:The partnership of Maring and Habagat began business on January 1, 2013. The following assets were contributed by each partner (the non-cash assets are stated at their fair values on
January 1, 2013):
Cash
Inventories
Maring
30,000
50,000
Habagat
20,000
Land
200,000
Equipment
The land was subject to a P65,000 mortgage, which the partnership assumed on January 1, 2013. The equipment was subject to an installment note payable that had an unpaid principal
amount of P35,000 on January 1, 2013. The partnership also assumed this note payable. According to the partnership. agreement, each partner was to have a 50% capital interest on
January 1, 2013, with total partnership capital being P300,000. Maring and Habagat agreed to share partnership income and losses in the following manner:
100,000
Maring
4%
Habagat
4%
Interest on beginning capital
Salaries
Remainder
During 2013, the following events occurred:
Inventory was acquired at a cost of P30,000. At December 31, 2013, the partnership owed P6,000 to its suppliers. The partnership inventory at December 31, 2013 was P20,000.
Principal of P10,000 was paid on the mortgage. Interest expense incurred on the mortgage was P4,000, all of which was paid by December 31, 2013.
Principal of P7,500 was paid on the installment note. Interest expense incurred on the installment note was P2,500, all of which was paid by December 31, 2013.
Sales on account amounted to P115,000. At December 31, 2013, customers owed the partnership P10,000.
Selling and general expenses, excluding depreciation, amounted to P21,000. At December 31, 2013, the partnership owed P3,000 of unrecorded accrued expenses. Depreciation
expense was P5,000.
Each partner withdrew P225 each week in anticipation of partnership profits.
The partners allocated the net income for 2013 and closed the accounts.
Additional information:
On January 1, 2014, the partnership decided to admit Nando to the partnership. On that date, Nando invested P100,900 of cash into the partnership for a 20% capital interest.
1. The share of Habagat on the net income of 2013 must be:
2. The capital balance of Maring at the end of 2013:
3. The capital balance of Habagat after Nando's admission must be:
15,000
60%
P
P
10,000
40%
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