On May 1, 2020, Cruz and Ferrer formed a partnership with each contributing the following assets: Cruz Ferrer Cash P 30,000 P 70,000 Machinery and Equipment Building 25,000 75,000 225,000 Furniture and Fixtures 10,000 The building is subject to a mortgage loan of P90,000 which is to be assumed by the partnership. The partnership agreement provides that Cruz and Ferrer share profits and losses 30 percent and 70 percent, respectively. Assuming that the partner agreed to bring their respective capital in proportion to their respective profit and loss ratio, and using Ferrer's capital as the base, how much cash is to be invested by Cruz?

On May 1, 2020, Cruz and Ferrer formed a partnership with each contributing the following assets: Cruz Ferrer Cash P 30,000 P 70,000 Machinery and Equipment Building 25,000 75,000 225,000 Furniture and Fixtures 10,000 The building is subject to a mortgage loan of P90,000 which is to be assumed by the partnership. The partnership agreement provides that Cruz and Ferrer share profits and losses 30 percent and 70 percent, respectively. Assuming that the partner agreed to bring their respective capital in proportion to their respective profit and loss ratio, and using Ferrer's capital as the base, how much cash is to be invested by Cruz?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

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

On May 1, 2020, Cruz and Ferrer formed a partnership with each contributing the following assets:
Cruz
Ferrer
Cash
P 30,000
P 70,000
Machinery and Equipment
Building
25,000
75,000
225,000
Furniture and Fixtures
10,000
The building is subject to a mortgage loan of P90,000 which is to be assumed by the partnership. The
partnership agreement provides that Cruz and Ferrer share profits and losses 30 percent and 70
percent, respectively.
Assuming that the partner agreed to bring their respective capital in proportion to their respective
profit and loss ratio, and using Ferrer's capital as the base, how much cash is to be invested by Cruz?

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