On June 30, 2015, the balance sheet of Western Marketing, a partnership, is summarized as follows: Sundry assets 150,000 West, capital 90,000 Tern, capital 60,000 West and Tern share profits and losses at a 60:40 ratio, respectively. They agreed to take in Cuba as a new partner, who purchases 1/8 interest of West and tern for P25,000. What is the amount of Cuba’s capital to be taken up in the partnership books if book value method is used? A. 12,500 C. 25,000 B. 18,750
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.
On June 30, 2015, the
summarized as follows:
Sundry assets 150,000
West, capital 90,000
Tern, capital 60,000
West and Tern share
take in Cuba as a new partner, who purchases 1/8 interest of West and tern for P25,000.
What is the amount of Cuba’s capital to be taken up in the partnership books if book
value method is used?
A. 12,500
C. 25,000
B. 18,750
D. 31,250
Step by step
Solved in 2 steps
