partnership. The partnership pays P73,000 cash for Banner’s interest. How much is the capital balances of Strange after Banner’s withdrawal under bonus method?
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.
Banner and Strange are partners who have a capital balances of P65,000 and P35,000 and share profits 3:2. Wanda is admitted as a partner and is given a 25% interest in the firm upon investing P40,000 cash. Profits are to be share 5:3:2 by Banner, Strange and Wanda. Subsequently a new partner, Peter, was admitted by investing P25,000 cash for a 20% interest in assets and a 20% share of the firm’s profits. Former partners share the balance of profits in their original ratio. Banner has difficulty getting along with Peter as a result, Banner withdraws from partnership. The partnership pays P73,000 cash for Banner’s interest. How much is the capital balances of Strange after Banner’s withdrawal under bonus method?
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