HH, II and JJ were partners with capital balances as of January 1, 20x7, of P100,000, P150,000 and P200,000, respectively, sharing profit and losses on a 3:3:4 ratio. On July 1, 20x7, HH withdraw from the partnership. Partners agreed that at the time of withdrawal, certain inventories had to be revalued at P50,000 from its cost of P70,000. For the six month period ending June 30, 20x7, the partnership generated a net income of P200,000. Further, partners agreed to pay HH, P185,000 for his interest and that the remaining partners' capital accounts, would be adjusted for whatever good will the settlement would generate. The payment of HH included a goodwill of: a. P8,000 b. P5,000 c. P13,000 d. P3,000
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.
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