The condensed Balance Sheet of the XY partnership on December 31, 2024, appears below. $60,000 200,000 Cash Other Assets Liabilities. X, Capital Y, Capital Total Liabilities and Capital $ 60,000 90,000 110,000 $260.000 Total Assets $260.000 X and Y share profits and losses in the ratio 40:60. Each of the following questions is independent of the others. Prepare journal entries for each of the following: Show all computations. a. Refer to the above information. Assume that Z purchases a one-fourth of Y's capital interest directly from Y for a total of $60,000. (Direct purchase) Compute each partner's balance after Z. is admitted. b. Refer to the above information. Assume Z invests $60,000 cash into the XY partnership for a one-fourth interest in partnership capital and profits. (Bonus method) Compute each partner's balance after Z is admitted.
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.
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