The partners' capital (income-sharing ratio in parenthesis) of Fiona, Shrek, Donkey and Puss on May 31, 2020, was as follows: Fiona (20%) - P60,000; Shrek (20%) - P80,000; Donkey (20%) - P70,000; Puss (40%) - P40,000. On May 31, 2020, with the consent of Fiona, Shrek and Puss, Donkey retired from the partnership and was paid P50,000 cash in full settlement of his interest in the partnership. Determine the capital balance of Shrek after the retirement of Donkey assuming the bonus approach.
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.
II. The partners' capital (income-sharing ratio in parenthesis) of Fiona, Shrek, Donkey and Puss on May 31, 2020, was as follows: Fiona (20%) - P60,000; Shrek (20%) - P80,000; Donkey (20%) - P70,000; Puss (40%) - P40,000. On May 31, 2020, with the consent of Fiona, Shrek and Puss, Donkey retired from the partnership and was paid P50,000 cash in full settlement of his interest in the partnership. Determine the capital balance of Shrek after the retirement of Donkey assuming the bonus approach.
Step by step
Solved in 2 steps
