Reference no: EM132786891

Donna, Rick, and Daisy are partners sharing profits in a 3:3:4 ratio, respectively. They have been overwhelmed by the amount of work recently and have agreed to admit Bud to the partnership for a cash investment. The current balances in their capital accounts are Php60,000, Php80,000, and Php120,000, respectively.

Question 1: Assuming Bud is given a 12.5% interest in the partnership for a Php60,000 cash investment, the entry to record his investment includes a:

a) credit to Bud, capital for Php40,000

b) debit to Donna, capital for Php6,000

c) credit to Rick, capital for Php8,000

d) credit to Bud, capital for Php60,000

Question 2: Assuming Bud is given a 20% interest in the partnership for an Php80,000 cash investment, the entry to record his investment includes a:

a) credit to Bud, capital for Php80,000

b) debit to loss on sale of partnership interest for Php12,000

c) debit to Daisy, capital for Php4,800

d) credit to Donna, capital for Php3,600

Question 3: Assuming Bud is given a 15% interest in the partnership for a Php70,000 cash investment, the entry to record his investment includes a:

a) credit to Donna, capital for Php6,150

b) credit to Bud, capital for Php70,000

c) debit to Rick, capital for Php6,150

d) credit to gain on sale of partnership interest for Php20,500