Herbert and Ireneo are partners sharing profits and losses in the ratio of 60% and 40%, respectively. The partnership balance sheet at August 30, 2016 follows: Cash 12,150 Other Assets 119,700 Accounts Payable 13,500 Herbert, Capital 86,850 Ireneo, Capital 31,500 At this date, Joshua was admitted as a partner for a consideration of P43,875 cash for a 40% interest in capital and in profits. Required: 1. Assume Joshua is admitted by purchase of 40% each of the original partner's interest: Calculate the amount credited to the capital of Joshua and amount received by Herbert and Ireneo for their respective partnership interest transferred to Joshua. 2. Assume Joshua is admitted by investing the P43,875 to the partnership: Calculate the partner's capital account of Herbert, Ireneo and Joshua after the admission, and New total Partner's equity using: a. Bonus Method b. Revaluation Method
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.
Herbert and Ireneo are partners sharing
Cash 12,150
Other Assets 119,700
Accounts Payable 13,500
Herbert, Capital 86,850
Ireneo, Capital 31,500
At this date, Joshua was admitted as a partner for a consideration of P43,875 cash for a 40% interest in capital and in profits.
Required:
1. Assume Joshua is admitted by purchase of 40% each of the original partner's interest: Calculate the amount credited to the capital of Joshua and amount received by Herbert and Ireneo for their respective partnership interest transferred to Joshua.
2. Assume Joshua is admitted by investing the P43,875 to the partnership: Calculate the partner's capital account of Herbert, Ireneo and Joshua after the admission, and New total Partner's equity using:
a. Bonus Method
b. Revaluation Method
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