EBK ACCOUNTING PRINCIPLES
EBK ACCOUNTING PRINCIPLES
13th Edition
ISBN: 9781119411017
Author: Weygandt
Publisher: WILEY
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Chapter 12, Problem 5PSA

(a)

To determine

Partnership: An association of more than one party with the objective of sharing profit and losses is called partnership. It is one form of business organization where risk is shared among two or more partners for their mutual benefit. The liability of partners is unlimited in partnership. Partnership can be easily formed because the process is simple and there less complexities in legal rules.

Journalizing: It is the process of recording the transactions of an organization in a chronological order. Based on these journal entries recorded, the amounts are posted to the relevant ledger accounts.

Accounting rules for journal entries:

  • To increase balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue and gains.
  • To decrease balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue and gains.

To prepare: Journal entries.

(b)

(1)

To determine

The total bonus to the remaining partners.

(2)

To determine

The cash paid by partnership to P.

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