Reference no: EM133053244
Question - On March 1, 2016, A and B invested in its first year of operations the following cash: A, P480,000 and B, P240,000.
The partners agree to allocate profits and losses as follows:
-A and B will be allowed a monthly salary of P48,000 and P24,000, respectively.
-The partners will be allowed with interest of 10% of their capital balances at the beginning of each year.
-The remainder will be divided on the bases of their beginning capital for the first year of operation and equally for the subsequent years.
-Each partner is allowed to withdraw up to P24,000 a year. Any withdrawal in excess will be treated as a direct reduction from their capital balances.
In 2016, the partnership suffered a net loss of P36,000. But in 2017 they earned a net profit of P132,000. The partners withdrew the maximum amount from the partnership each year. On January 1, 2018, a new partner, C was admitted in the partnership for an investment of P400,000 for a 40% interest. No revaluation of assets is to be recorded. After the admission of C, the partners agreed to divide profits and losses, 4:2:4, to A, B and C respectively.
Requirement - On January 1, 2018, what is the entry to record the admission of C?
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