X, Y, and Z are partners sharing profits and losses in the ratio of 5:3:2. During the year, their investments and withdrawals are as follows: Investment of X, Y, and Z for $200,000, $175,000 and $375,000 respectively. Withdrawals of X, Y, and Z amounting to $125,000, $62,500 and $62,500 respectively. On December 31, 2021, the partners decided to liquidate their business. After exhausting partnership assets, liabilities of $125,000 remain unpaid. X is personally insolvent. The gain or loss on realization is: a. 125,000 b. -125,000 c. 625,000 d. -625,000
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.
X, Y, and Z are partners sharing
a. 125,000
b. -125,000
c. 625,000
d. -625,000
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