Problem #1 (Adapted) Jack and Jill are partners who share profit or loss in the ratio of 3:2. They have capital balance of P200,000 and P300,000, respectively. Jill needed money and made known to Jack her intention to withdraw part of her capital in the partnership. However, much of the partnership funds are tied-up in accounts receivables and inventories and Jack suggested that she just sell the interest of her to Hill, a common friend. Hill agrees to purchase ½ of Jill's interest for P170,000. Required: A. Prepare journal entry in the books of partnership to record the admission of Hill. B. Determine the composition and total partnership capital after admission of Hill. c. Does it necessarily follow that Hill will have 20% share in the profit or loss (1/2 of the share of Jill)?
Problem #1 (Adapted) Jack and Jill are partners who share profit or loss in the ratio of 3:2. They have capital balance of P200,000 and P300,000, respectively. Jill needed money and made known to Jack her intention to withdraw part of her capital in the partnership. However, much of the partnership funds are tied-up in accounts receivables and inventories and Jack suggested that she just sell the interest of her to Hill, a common friend. Hill agrees to purchase ½ of Jill's interest for P170,000. Required: A. Prepare journal entry in the books of partnership to record the admission of Hill. B. Determine the composition and total partnership capital after admission of Hill. c. Does it necessarily follow that Hill will have 20% share in the profit or loss (1/2 of the share of Jill)?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Problem #1 (Adapted)
Jack and Jill are partners who share profit or loss in the ratio of 3:2.
They have capital balance of P200,000 and P300,000, respectively.
Jill needed money and made known to Jack her intention to
withdraw part of her capital in the partnership. However, much of
the partnership funds are tied-up in accounts receivables and
inventories and Jack suggested that she just sell the interest of her to
Hill, a common friend. Hill agrees to purchase ½ of Jill's interest for
P170,000.
Required:
A. Prepare journal entry in the books of partnership to record the
admission of Hill.
B. Determine the composition and total partnership capital after
admission of Hill.
c. Does it necessarily follow that Hill will have 20% share in the
profit or loss (1/2 of the share of Jill)?
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