Reference no: EM132964590
Question - On January 1, 2011, A, B, and C formed a partnership. A contributed cash of P100,000 and a delivery equipment with an original cost of P120,000 and a fair value of P50,000. B contributed P160,000 cash. C contributed office equipment with historical cost of P100,000 and fair value of P120,000. The partnership earned profit of P120,000 in 2011.
Requirement - Compute for the adjusted balances of the partners' respective capital accounts on December 31, 20x1.
Scenario 1: (Use the fact pattern above) On January 1, 2012, D was admitted to the partnership when he purchased a proportionate interest from A and B representing 20% interest in the net assets and profits of the firm for P100,000. The assets of the firm as of this date approximate their fair values.
Requirements: a. Provide the entry to record the admission of D. b. Compute for the capital balances of the partners after the admission of D.
Scenario 2: (Use the fact pattern above) Ignore the facts in Scenario 1,' In additional. Assume that the partners' profit and loss sharing ratio is 40:40:20. On December 31, 2011, B decided to withdraw from the partnership. The partners agreed that the partnership shall pay B P164,000 for his capital. Requirements: Provide the entry to record the withdrawal of B. Compute for the capital balances of the partners after the withdrawal of B. Compute for the profit and loss sharing ratio of the remaining partners after the withdrawal of B.
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