A, B, and C put up a partnership on January 1, 2020 by investing P500,000 each and agreed to maintain individual average capital of P520,000 during the first two years of operations. The partners agreed to divide profits and losses as follows: • Interest at 8% on the excess or deficiency on the average capital investment. Bonus to B at 25% of profits after interests but before bonus. Remainder to be shared equally by A, B, and C. On April 1, 2020, A made an additional investment in the form of a machinery. The partners determined that the market value of the said machinery is P350,000 but agreed to value it at P300,000. On June 30, 2020, C made a withdrawal of P75,000 in anticipation of partnership profit share. On August 1, 2020, B invested an additional P90,000 cash. Lastly, on November 30, 2020, C made a permanent withdrawal of P30,000. The partnership reported a profit of P250,000 for the first year ended 2020.
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.
What is the average capital balance of A during 2020?
How much is the bonus given to B during 2020?
How much is the share of A in the
What is the capital balance of C on December 31, 2020?
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