Riley and Siobhan start a partnership business on June 12, 2019. Their capital account balances as of December 31, 2020 stood as follows: Riley $ 50,000.00 Siobhan $ 23,000.00 They agreed to admit Erin into the business for a one-fifth interest in the new partnership. Erin contributes $27,000 cash in exchange for the partnership interest. How much Capital does Erin receive?
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.
Riley and Siobhan start a partnership business on June 12, 2019. Their capital account balances as of December 31, 2020 stood as follows:
| Riley | $ 50,000.00 |
| Siobhan | $ 23,000.00 |
They agreed to admit Erin into the business for a one-fifth interest in the new partnership. Erin contributes $27,000 cash in exchange for the partnership interest. How much Capital does Erin receive?
The partner would receive the capital in the ratio of his interest.
Step by step
Solved in 3 steps
