The following are the condensed balance sheets of G&N Partnership at August 30, 2016, at which date Ellery is to be admitted with a 30% interest in capital for an investment of 55,000. Book Value Cash $ 20,000 Other assets 503,000 Total assets $ 523,000 Current liabilities 54,000 Non current liabilities 269,000 Gemmo, capital 120,000 Norma, capital 80,000 Total equities $ 523,000 Fair Value Cash $ 20,000 Other assets 417,000 Total assets 437,000 Current liabilities $ 54,000 Non current liabilities 275,000 Gemmo and Norma share profits at 60% and 40%, respectively. Required: Choose the correct answer with solution. 1. What will be the respective capital balances of Gemmo, Norma, and Ellery after the new partner's admission. a. $68,460, $45,640, $48,900 b. $48,900, $45,640, $68,460 c. $45,640, $68,460, $48,900 d. $64,860, $49,240, $48,900
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 with 4 images
