The following balances as at October 31, 2016 for the Partnership of Kathy , Lilia and Minda were as follows : Kathy , Capital 127,500 Lilia , Capital 82,500 Minda , Capital 225,000 Kathy has decided to retire from the partnership on October 31. Their profit and loss ratio is 3:3 :4 to Kathy , Lilia and Minda , respectively. Assumptions : a. All the remaining partners will purchase the interest of Kathy by paying P120,000 b. Only Minda will purchase the interest of Kathy by paying P100,000. c. A new partner Olan will purchase the interest of Kathy by paying P80,000. d. The partnership will purchase the interest by paying 168,000 and no goodwill is to be recorded. e. The partnership will purchase the interest by paying 126, 000 and no goodwill is to be recorded. f. The partnership will purchase the interest by paying 150, 000 and goodwill is to be recorded . Required: i. Table (like in the discussion ). ii. Entry upon retirement of Kathy. iii.Answers to the following questions: 1. What will be the total capital of the partnership upon Kathy's retirement? 2. What will be the new partnership sharing agreement? 3. What amount of capital will be debited / credited to Kathy upon Kathy's retirement? ( indicate whether it is debit or credit ) 4. What amount of capital will be debited / credited to Lilia upon Kathy's retirement? ( indicate whether it is debit or credit ) 5. What amount of capital will be debited / credited to Minda upon Kathy's retirement? ( indicate whether it is debit or credit )
The following balances as at October 31, 2016 for the Partnership of Kathy , Lilia and Minda were as follows : Kathy , Capital 127,500 Lilia , Capital 82,500 Minda , Capital 225,000 Kathy has decided to retire from the partnership on October 31. Their profit and loss ratio is 3:3 :4 to Kathy , Lilia and Minda , respectively. Assumptions : a. All the remaining partners will purchase the interest of Kathy by paying P120,000 b. Only Minda will purchase the interest of Kathy by paying P100,000. c. A new partner Olan will purchase the interest of Kathy by paying P80,000. d. The partnership will purchase the interest by paying 168,000 and no goodwill is to be recorded. e. The partnership will purchase the interest by paying 126, 000 and no goodwill is to be recorded. f. The partnership will purchase the interest by paying 150, 000 and goodwill is to be recorded . Required: i. Table (like in the discussion ). ii. Entry upon retirement of Kathy. iii.Answers to the following questions: 1. What will be the total capital of the partnership upon Kathy's retirement? 2. What will be the new partnership sharing agreement? 3. What amount of capital will be debited / credited to Kathy upon Kathy's retirement? ( indicate whether it is debit or credit ) 4. What amount of capital will be debited / credited to Lilia upon Kathy's retirement? ( indicate whether it is debit or credit ) 5. What amount of capital will be debited / credited to Minda upon Kathy's retirement? ( indicate whether it is debit or credit )
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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.
Question
The following balances as at October 31, 2016 for the Partnership of Kathy , Lilia and Minda were as follows :
Kathy , Capital 127,500
Lilia , Capital 82,500
Minda , Capital 225,000
Kathy has decided to retire from the partnership on October 31. Their profit and loss ratio is 3:3 :4 to Kathy , Lilia and Minda , respectively.
Assumptions :
a. All the remaining partners will purchase the interest of Kathy by paying P120,000
b. Only Minda will purchase the interest of Kathy by paying P100,000.
c. A new partner Olan will purchase the interest of Kathy by paying P80,000.
d. The partnership will purchase the interest by paying 168,000 and no goodwill is to be recorded.
e. The partnership will purchase the interest by paying 126, 000 and no goodwill is to be recorded.
f. The partnership will purchase the interest by paying 150, 000 and goodwill is to be recorded .
Required:
i. Table (like in the discussion ).
ii. Entry upon retirement of Kathy.
iii.Answers to the following questions:
1. What will be the total capital of the partnership upon Kathy's retirement?
2. What will be the new partnership sharing agreement?
3. What amount of capital will be debited / credited to Kathy upon Kathy's retirement? ( indicate whether it is debit or credit )
4. What amount of capital will be debited / credited to Lilia upon Kathy's retirement? ( indicate whether it is debit or credit )
5. What amount of capital will be debited / credited to Minda upon Kathy's retirement? ( indicate whether it is debit or credit )
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