Z admits A as a partner in business. Accounts in the ledger for Z on November 20, 2018, just before the admission of A, show the following balances: Cash P 6,800 Accounts Receivable 14,200 Merchandise Inventory 20,000 Prepaid expense 1,000 Accounts Payable 9,000 Z, Capital 33,000 It is agreed that the purposes of establishing Z's interest the following adjustments shall be made: a) An allowance for doubtful accounts of 3% of accounts receivable is to be established b) The merchandise inventory is to be valued at P23,000. c) Prepaid salary expenses of P600 and accrued rent expense of P800 are to be recognized. A is to invest sufficient cash to obtain a 1/3 interest in the partnership. (1) Z's adjusted capital before the admission of A; and (2) the amount cash investment by A:
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.
Z admits A as a partner in business. Accounts in the ledger for Z on November 20, 2018, just before the admission of A, show the following balances:
Cash P 6,800
Merchandise Inventory 20,000
Prepaid expense 1,000
Accounts Payable 9,000
Z, Capital 33,000
It is agreed that the purposes of establishing Z's interest the following adjustments shall be made:
a) An allowance for doubtful accounts of 3% of accounts receivable is to be established
b) The merchandise inventory is to be valued at P23,000.
c) Prepaid salary expenses of P600 and accrued rent expense of P800 are to be recognized.
A is to invest sufficient cash to obtain a 1/3 interest in the
(1) Z's adjusted capital before the admission of A; and (2) the amount cash investment by A:
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