Partnership : It is an organization in which two or more person join together to do a business in which they all share profit and losses in an agreed ratio. One or more partners are acting in behalf of all partners. Each partner is responsible for the act of firm. Requirement-1: To Give: Journal entries of adjustments. Case 1 Particulars Amount Cash 600000 Equipment 537200 Profit and Loss 62800 (Being equipment sold.) Profit and loss 62800 Partner 1 31400 Partner 2 20933 Partner 3 10467 (Being Profit distributed.) Accounts Payable 245500 Cash 245500 (Being liability paid at book value.) Partner 1 124400 Partner 2 233433 Partner 3 177467 Cash 535300 (Being cash distributed in partners.) Calculation of cash distribution Sale of equipment (A) 600000 Book value of equipment 537200 Profit on sale 62800 Cash balance (B) 180800 Total Cash (A+B)= C 780800 Liability (D) 245500 Cash balance after liability 535300 Partner 1 Partner 2 Partner 3 Opening Balance 93000 212500 167000 Add: Profit (3:2:1) 31400 20933 10467 Total Cash received 124400 233433 177467 Concept Introduction: Partnership: It is an organization in which two or more person join together to do a business in which they all share profit and losses in an agreed ratio. One or more partners are acting in behalf of all partners. Each partner is responsible for the act of firm. Requirement-2: To Give: Journal entries of adjustments. Particulars Amount Cash 500000 Profit and loss 37200 Equipment 537200 (Being equipment sold.) Partner 1 18600 Partner 2 12400 Partner 3 6200 Profit and loss 37200 (Being Loss distributed.) Accounts Payable 245500 Cash 245500 (Being liability paid at book value.) Partner 1 74400 Partner 2 200100 Partner 3 160800 Cash 435300 (Being cash distributed in partners.) Calculation of cash distribution Sale of equipment (A) 500000 Book value of equipment 537200 Loss on sale -37200 Cash balance (B) 180800 Total Cash (A+B)= C 680800 Liability (D) 245500 Cash balance after liability 435300 Partner 1 Partner 2 Partner 3 Opening Balance 93000 212500 167000 Less: Loss (3:2:1) -18600 -12400 -6200 Total Cash received 74400 200100 160800 Concept Introduction: Partnership: It is an organization in which two or more person join together to do a business in which they all share profit and losses in an agreed ratio. One or more partners are acting in behalf of all partners. Each partner is responsible for the act of firm. Requirement-3: To Give: Journal entries of adjustments. Particulars Amount Cash 320000 Profit and loss 217200 Equipment 537200 (Being equipment sold.) Partner 1 108600 Partner 2 72400 Partner 3 36200 Profit and loss 217200 (Being Profit distributed.) Accounts Payable 342600 Cash 342600 (Being liability paid at book value.) Partner 2 129700 Partner 3 125600 Cash 255300 (Being cash distributed in partners.) Calculation of cash distribution Sale of equipment (A) 320000 Book value of equipment 537200 Loss on sale -217200 Cash balance (B) 180800 Total Cash (A+B)= C 500800 Liability (D) 245500 Cash balance after liability 255300 Partner 1 Partner 2 Partner 3 Opening Balance 93000 212500 167000 Less: Loss (3:2:1) -108600 -72400 -36200 Gross Cash received -15600 140100 130800 Less: Loss adjusted of partner 1 15600 -10400 -5200 Net amount received 0 129700 125600 Concept Introduction: Partnership: It is an organization in which two or more person join together to do a business in which they all share profit and losses in an agreed ratio. One or more partners are acting in behalf of all partners. Each partner is responsible for the act of firm. Requirement-4: To Give: Journal entries of adjustments. Particulars Amount Cash 150000 Profit and loss 287200 Equipment 617200 (Being equipment sold.) Partner 1 143600 Partner 2 95733 Partner 3 143600 Profit and loss 287200 (Being Profit distributed.) Accounts Payable 342600 Cash 342600 (Being liability paid at book value.) Partner 2 83033 Partner 3 102267 Cash 185300 (Being cash distributed in partners.) Calculation of cash distribution Sale of equipment (A) 250000 Book value of equipment 537200 Loss on sale -287200 Cash balance (B) 180800 Total Cash (A+B)= C 430800 Liability (D) 245500 Cash balance after liability 185300 Partner 1 Partner 2 Partner 3 Opening Balance 93000 212500 167000 Add: Profit (2:1:2) -143600 -95733 -47867 Gross Cash received -50600 116767 119133 Add: Loss adjusted of partner 3 50600 -33733 -16867 Net amount received 0 83033 102267

Connect Access Card for Financial Accounting: Information and Decisions

8th Edition

ISBN: 9781259662966

Author: John J Wild

Publisher: McGraw-Hill Education

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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 …

Partner Admission and Withdrawal

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