partnership of Tom Jones and Rita Charles is considering admitting a new partner Terry Adams. After the assets of the partnership have been adjusted to current market value, the capital balance of Jones is $40,000 and the capital balance of Charles is $48,000. Jones and Charles agree to admit Adams to the partnership for $62,000. Adams will received a 25% equity in the partnership and will participate equally with Jones and Charles in the partnership income and losses.
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.
Assume that on January 1, 2021 the
Prepare the entry to record the admission of Terry Adams.
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