Answered: uan and Pedro formed a partnership on…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Juan and Pedro formed a partnership on June 1, 2022. They contributed cash amounting to P 50,000 and P 70,000, respectively. Juan contributed land costing P200,000. The said land has unpaid mortgage of P20,000 which was assumed by the partnership. Juan agreed to let Pedro have a 30% interest in the partnership by reason of his outstanding business expertise. Under the bonus method, Juan’s capital on June 1, 2022 will be:

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement 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, and drawings of a partner.

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