Admission by Purchase of Interest or Investment of Assets Castro and Falceso are partners who share profits and losses in a ratio of 2:3, respectively, and have the following capital balances on Sept. 30, 2020: Castro, Capital, P100,000 Cr. and Falceso, Capital, P150,000 Cr. The partners agreed to admit Garachico to the partnership. Required: Calculate the capital balances of each partner after the admission of Garachico, assuming that bonuses are recorded when appropriate for each of the following assumptions: Garachicho paid Castro P50,000 for 40% of his interest. Garachico invested P50,000 for a one-sixth interest in the partnership. Garachico invested P50,000 for a 25% interest in the partnership. Garachico invested P50,000 for a 15% interest in the partnership.
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.
Admission by Purchase of Interest or Investment of Assets
Castro and Falceso are partners who share
Required: Calculate the capital balances of each partner after the admission of Garachico, assuming that bonuses are recorded when appropriate for each of the following assumptions:
- Garachicho paid Castro P50,000 for 40% of his interest.
- Garachico invested P50,000 for a one-sixth interest in the partnership.
- Garachico invested P50,000 for a 25% interest in the partnership.
- Garachico invested P50,000 for a 15% interest in the partnership.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
