Requirement: Which partner should provide additional investment(or withdraw part of this investment in order to bring the partners capital credits equal to their respective interest in the equity of 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.
A and B agreed to form a partnership. The partnership agreement stipulates the following:
Initial capital of $280,000
A 60:40 interest in the equity of the partnership,
A. Contributed $200,000 cash while B. Contributed $280,000 cash.
Requirement: Which partner should provide additional investment(or withdraw part of this investment in order to bring the partners capital credits equal to their respective interest in the equity of the partnership?
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