The partner’s capital (profit and loss ratio in parentheses) of Bob, Dex, Larry, and Rey on February 28, 2022, was as follows: Bob (20%) ₱60,000 Dex (20%) 80,000 Larry (20%) 70,000 Rey (40%) 40,000 Total ₱250,000 On February 28, 2022, with the consent of Bob, Dex, and Rey: On March 8, Larry retired from the partnership and was paid ₱50,000 cash in full settlement of his interest in the partnership. On March 18, Alex was admitted to the partnership with a ₱20,000 cash investment for a 10% interest in the net assets of the partnership. The total agreed capital is ₱220,000. Prepare all the necessary journal entries to reflect the withdrawal of Larry and admission of Alex.
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.
The partner’s capital (
|
Bob (20%) |
₱60,000 |
|
Dex (20%) |
80,000 |
|
Larry (20%) |
70,000 |
|
Rey (40%) |
40,000 |
|
Total |
₱250,000 |
On February 28, 2022, with the consent of Bob, Dex, and Rey:
- On March 8, Larry retired from the partnership and was paid ₱50,000 cash in full settlement of his interest in the partnership.
- On March 18, Alex was admitted to the partnership with a ₱20,000 cash investment for a 10% interest in the net assets of the partnership. The total agreed capital is ₱220,000.
Prepare all the necessary
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