Answered: eon, Kim, and Min are partners with…

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter14: Partnerships And Limited Liability Entities

Section: Chapter Questions

Problem 2BD

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Jeon, Kim, and Min are partners with present capital balances of P500,000, P600,000, and P200,000, respectively. The partners share profit and losses according to the following percentages: 60% for Jeon, 20% for Kim, and 20% for Min. Park is to join the partnership upon contributing P600,000 to the partnership in exchange for a 25% interest in capital and a 20% interest in profits and losses. The existing assets of the original partnership are undervalued by P220,000. The original partners will share the balance of profits and losses in proportion to their original percentages.

Using the total/full goodwill method, answer the following (answers can be repeated):

a. The revaluation of assets will increase/decrease the assets by:

b. The total contributed capital is

c. The total agreed capital is

d. Asset (Goodwill) will be debited/credited by

e. After the admission of Park, the total capital of Jeon is

f. After the admission of Park, the total capital of Kim is

g. After the admission of Park, the total capital of Min is

h. Park's capital credit is

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement 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, and drawings of a partner.

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