Problem #3 Admission by Purchase of Interest or Investment of Assets Dolores Aguilar, Isolde Sustrina, and Beth Bigalbal are partners in Cavite Realty Company. Their capital balances as at July 31, 2019, are as follows: Aguilar, Capital - 450,000 Sustrina, Capital- 150,000 Bigalbal, Capital- 300,000 Each partner has agreed to admit Nelia Pascual to the partnership. Required: Prepare the entries to record Pascual’s admission to or Aguilar’s withdrawal from the partnership under each of the following conditions: Pascual paid Aguilar P125,000 for 20% of Aguilar’s interest in the partnership
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.
Problem #3
Admission by Purchase of Interest or Investment of Assets
Dolores Aguilar, Isolde Sustrina, and Beth Bigalbal are partners in Cavite Realty Company. Their capital balances as at July 31, 2019, are as follows:
Aguilar, Capital - 450,000
Sustrina, Capital- 150,000
Bigalbal, Capital- 300,000
Each partner has agreed to admit Nelia Pascual to the
Required:
Prepare the entries to record Pascual’s admission to or Aguilar’s withdrawal from the partnership under each of the following conditions:
- Pascual paid Aguilar P125,000 for 20% of Aguilar’s interest in the partnership.
- Pascual invested P200,000 cash in the partnership and received an interest equal to her investment.
- Pascual invested P300,000 cash in the partnership for a 20% interest in the business. A bonus is to be recorded for the original partners on the basis of their capital balances.
- Pascual invested P300,000 cash in the partnership for a 40% interest in the business. The original partners gave Pascual a bonus according to the ratio of their capital balances on July 31, 2019.
- Aguilar withdrew from the partnership, taking P525,000. The excess of withdrawn assets over Aguilar’s partnership interest is distributed according to the balances of the Capital accounts.
- Aguilar withdrew by selling her interest directly to Pascual for P600,000.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
