2. Psalm and Selah decided to form a partnership on June 30, 2030, Assets contributed by the partners are: Psalm Selah Book Value Fair Value Book Value Fair value Cash P375,000 P375,000 P875,000 P875,000 Merchandise inventory 95,000 125,000 Furniture and fixtures 350,000 312,500 872,500 937,500 Transportation equipment 3,262,500 2,812,500 The transportation equipment is subject to a mortgage loan of P1,125,000, which is to be assumed by the partnership. The partnership agreement provides that Psalm and Selah share profits and losses of 30% and 70% respectively. Assuming that the partners agreed to bring their respective capital in proportion to their profit and loss ratio, using Selah capital as base. How much additional cash is to be invested (withdrawn) by Psalm? A. P(687,500) B. P(987,500) C. P 875,000 D. P 687,500
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.
2. Psalm and Selah decided to form a
Psalm Selah
| Book Value | Fair Value | Book Value | Fair value | |
| Cash | P375,000 | P375,000 | P875,000 | P875,000 |
| Merchandise inventory | 95,000 | 125,000 | ||
| Furniture and fixtures | 350,000 | 312,500 | 872,500 | 937,500 |
| Transportation equipment | 3,262,500 | 2,812,500 |
The transportation equipment is subject to a mortgage loan of P1,125,000, which is to be assumed by the partnership. The partnership agreement provides that Psalm and Selah share profits and losses of 30% and 70% respectively.
Assuming that the partners agreed to bring their respective capital in proportion to their
A. P(687,500)
B. P(987,500)
C. P 875,000
D. P 687,500
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