Reference no: EM132907656
On January 1,2019, Ben and Len have capital balances of P 3,000,000 and P 2,750,000, respectively. On this day, they decided to admit Ken by making him contribute his land worth P 1,500,000 and cash of P 175,000 for a 25% interest in the partnership. Profit and loss ratio of Ben and Len is 60:40.
During 2019, the partnership incurred a net income of P 180,000. On January 1,2020, the partners agreed to admit Jen for a 20% interest in the partnership by making her pay 1,500,000 because on this date the land of the partnership is not fairly valued. The partnership incurred a loss of P 50,000 for year 2020 and on June 1,2020, Ben invested an additional amount of cash of P 45,000.
On December 31,2020, Len decided to retire from the partnership and the remaining partners agreed to pay her an amount equal to 120% of her capital balance at the time of her retirement from the partnership
Problem 1: What are the balances of the capital accounts of Ben and Len after the admission of Ken?
Problem 2: Prepare the entries regarding the admission of Ken to the partnership.
Problem 3: What are the balances of the capital accounts of Ben, Len & Ken on December 31,2019?
Problem 4: What are the balances of the capital accounts of Ben, Len, Ken and Jen after the admission of Jen to the partnership?
Problem 5: Prepare the entries regarding the admission of Jen to the partnership
Problem 6: What are the balances of the capital accounts of Ben, Ken and Jen after retirement of Len on December 31,2020?
Problem 7: Prepare the entries regarding the retirement of Len from the partnership.
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