Nali contributed $24,000 and Toh contributed $48,000 to form a partnership and they agreed to share profits in the ratio of their original capital contributions. During the first year of operations, they made a profit of $16,290; Nali withdrew $5,050 and Toh $8,000. At the start of the following year, they agreed to admit Me into the partnership. Me was to receive a one fourth interest in the capital and profits upon payment of $30,000 to Nali and Toh, whose capital accounts were to be reduced by transfers of Me’s capital account of amounts sufficient to bring them back to their original capital ratio. How much of the $30,000 paid by Me must be given to Nali? A. 10,000 B. 9,300 C. 5,570 D. 3,730
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.
Nali contributed $24,000 and Toh contributed $48,000 to form a
A. 10,000 B. 9,300 C. 5,570 D. 3,730
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