journal entry; 1. On December 31, 20X1, John joins the partnership of Andrew and Jess by purchasing 10% of Andrew’s capital for P 70,000. Andrew and Jess have capital balances of P 400,000 and P 300,000, respectively, as of December 31, 20X1. Required: Record John’s admission in the partnership.
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.
1. On December 31, 20X1, John joins the partnership of Andrew and Jess by purchasing 10% of Andrew’s
capital for P 70,000. Andrew and Jess have capital balances of P 400,000 and P 300,000, respectively, as
of December 31, 20X1.
Required: Record John’s admission in the partnership.
2. On June 1, 20X1, John was admitted in the partnership of Andrew and Jess by investing P 100,000 cash.
Consequently, John became a new partner in the partnership. The partners agreed to credit John’s capital
account with an amount equal to his investment. Andrew and Jess have capital balances of P 300,000
and P 150,000 respectively as of June 1, 20X1, with a P/L ratio of 7:3.
Required: Record John’s admission in the partnership.
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