Razan and Rawan were partners sharing the profits and losses of their partnership firm “ Maa and Me ” in the ratio of 5:3. As the duo were struggling with managing the ever increasing financial needs of their business and hence they decided to admit Rehab in their partnership firm. Rihab, a rich lady was drawn in to induce funds in the cash strapped business. She agreed to participate in the struggling venture demanding a 5/9 share in profits, which was agreed by Razan and Rawan. You are requested to explain in detail as to how the reconstitution of the firm would take place considering each and every necessary adjustment including calculation wherever applicable.

Razan and Rawan were partners sharing the profits and losses of their partnership firm “ Maa and Me ” in the ratio of 5:3. As the duo were struggling with managing the ever increasing financial needs of their business and hence they decided to admit Rehab in their partnership firm. Rihab, a rich lady was drawn in to induce funds in the cash strapped business. She agreed to participate in the struggling venture demanding a 5/9 share in profits, which was agreed by Razan and Rawan. You are requested to explain in detail as to how the reconstitution of the firm would take place considering each and every necessary adjustment including calculation wherever applicable.

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

ChapterMB: Model-building Problems

Section: Chapter Questions

Problem 9M

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