The partnership of Peter, Paul and Mary share profits and losses in the ratio of 4:4:2 respectively. The partners voted to dissolve the partnership when its assets, liabilities and capital were as follows: Cash …………………………. P 250,000 Non-cash assets………………. 1,000,000 Total assets …………………. P 1,250,000 Liabilities ……………………………………. P 200,000 Peter, Capital ………………………………… 300,000 Paul, Capital …………………………………. 350,000 Mary, Capital …..……………………………. 400,000 Total liabilities and capital ……………..… P 1,250,000 The partnership will be liquidated over a prolonged period of time. As cash is available, it will be distributed to the partners. The first sale of non-cash assets having a book value of P600,000 realized P475,000. How much cash should be distributed to each partner after this sale? a. Peter – P90,000; Paul – P140,000; Mary – P 295,000 b. Peter – P210,000; Paul – P290,000; Mary – P 145,000 c. Peter – P290,000; Paul – P210,000; Mary – P 105,000 d. Peter – P150,000; Paul – P175,000; Mary – P 200,000
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.
The partnership of Peter, Paul and Mary share
Cash …………………………. P 250,000
Non-cash assets………………. 1,000,000
Total assets …………………. P 1,250,000
Liabilities ……………………………………. P 200,000
Peter, Capital ………………………………… 300,000
Paul, Capital …………………………………. 350,000
Mary, Capital …..……………………………. 400,000
Total liabilities and capital ……………..… P 1,250,000
The partnership will be liquidated over a prolonged period of time. As cash is available, it will be distributed to the partners. The first sale of non-cash assets having a book value of P600,000 realized P475,000. How much cash should be distributed to each partner after this sale?
a. Peter – P90,000; Paul – P140,000; Mary – P 295,000
b. Peter – P210,000; Paul – P290,000; Mary – P 145,000
c. Peter – P290,000; Paul – P210,000; Mary – P 105,000
d. Peter – P150,000; Paul – P175,000; Mary – P 200,000
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