Problem 3-13 A's single Proprietorship has the following balances: Cash Noncash assets Accounts payable P10,000 90,000 25,000 B is invited to invest P125,000 to convert the sole proprietorship into partnership. The noncash assets of the sole proprietorship are fairly valued. A and B agreed that their respective capital balances would be 40% and 60% of the total partnership capitalization. Required: Prepare the journal entries to record the investments of A and B under: a. Bonus method. b. Goodwill method (total partner capital to be based on partner B).
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.
Step by step
Solved in 2 steps
