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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.
The
Assets 640,000
Liabilities 240,000
AA, Loan 64,000
AA, Capital 168,000
BB, Capital 120,000
CC, Capital 48,000
Total 640,000
AA, BB and CC share profits 5:3:2 respectively. Certain assets are sold for P440,000. Creditors are paid in full, partners are paid P140,000 and cash of P60,000 is withheld for contingencies. How much cash is to be distributed to AA?
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- 45. ABCD's balance sheet before liquidation shows the following figures: In $ Activities 90,000 Liabilities 20,000 Loans A = 5,000 Capital A = 20,000 Capital B = 20,000 Capital C = 20,000 Capital D= 5,000 A, B, C, D share their respective profits in a 2:1:1:1 ratio Certain assets are sold for $35,000 The creditors were paid in full, the partners were paid $10,000, and a cash sum of $5,000 was withheld pending future developments. Prepare the journal entries needed to record the above tra of cash to partners. tions Includes the distributionThe statement of financial position of L, M, and N just before liquidation shows the following:Cash P 20,000 ; Non-cash Assets 240,000 ; Accounts Payable 40,000 ; N, Loan 40,000 ; L, Capital 62,000 ; M, Capital 88,000 ; N, Capital 30,000L, M, and N share profits and losses in the ratio of 3:2:5, respectively. The non-cash assets were sold for P160,000. How much cash is received by N in full settlement of his total interest in the partnership, including loan?The statement of financial position of the firm of Wanda, Wendy and Wilma j Numbers 19- 20 are based on the following: Name: before liquidation shows the following: Program- P240,000 Multiple C Assets 1. Sharc acco ovors ods P100,000 Liabilities muous i Wanda, Loan no 0 20,000 Wanda, Capital Wendy, Capital Wilma, Capital 44,000 60,000 000,0010 The 16,000 P240,000 120 000 00 0,001 Total acc rec Wanda, Wendy and Wilma share profits 5: 3: 2 respectively. Certain assets worth P160,000 are sold at book value. Creditors are paid in full, partners paid P40,000 and cash of P20,000 is withheld pending future developments norh 0ONT 19. How much cash is to be distributed to the partners? to oadn Wanda Wendy Wilma a. P14,000 b. P11,500 c. P10,500 d. P15,100 P26,000 0) 30,of 1 2. P28,500 P29,500 P24,900 e. None of the above. ve de do sno oa ors 000.00 orHoe stes deso-on sti 20. How much cash is to be distributed to the partners if they share profits at a tan of 3:6:1 respectively? Wanda Wendy Wilma…
- Item Nos. 8 and 9 are based on the following information: Before the realization of assets and payment of liabilities, the capital balances of A, B, and C are P 12,000, P 18,000, and P 20,000, respectively. They share profits in the ratio of 4:1:5. 8. If B received P 17,200 during the liquidation, how much did A receive? a. P 8,000. C. P 9,000. b. P 8,800. d. P 12,000. 9. How much cash was distributed to the partners? a. P 40,000. C. P 48,000. 1 b. P 42,000. d. P 50,000. 1Partners Ong, Rodriguez, Pamittan and Reyes who share profits andlosses at 30%, 30%, 20% and 20%, respectively, decided to liquidate. Allpartnership assets are to be converted into cash. Before liquidation, thecondensed statement of financial position follows:Cash P100, 000 Liabilities P750, 000Other Assets 1, 800, 000 Rodriguez, Loan 60, 000Reyes, Loan 50, 000Ong, Capital 420, 000Rodriguez, Capital 315, 000Pamittan, Capital 205, 000Reyes, Capital 100, 000Total P1, 900,000P1, 900,000The non-cash assets realized P800, 000, resulting to a loss of P1, 000,000. All the partners are solvent, and can contribute any additional cash tocover any deficiency. In the process of liquidation, deficiencies will occur andwill require additional investment as follows:a. Pamittan at P7, 500b. Reyes at P50, 000c. Reyes and Pamittan for P50, 000 and P7, 500, respectivelyd. NoneQL Unhappy Ltd is in liquidation. After identifying all assets and liabilities, the liquidator prepared the balance sheet as at 31 October 2019 below, based on the company's records. Preference shares have preference as to dividends and repayment of capital. All ordinary shares rank equally. • Liquidator's fees and expenses together amounted to $23,000. The nen-cash assets realised in total $478,000 of which $190,000 was from the sale of buildings. Required: Prepare ONLY the Receipts and Payments ledger account related to the final liquidation of Unhappy Ltd ( payments would be made by the liquidator ), and show the preference order in which Include all workings and calculations in your answer. Unhappy Ltd (Iin liquidation) Balance Sheet as at 31 October 2019 24 Current assets 2,000 68,000 84,000 Cash in hand Accounts receivable 154,000 Inventory Non-current assets 110,000 250,000 310,000 Land Buildings (net) Plant and machinery Goodwill 26,000 696,000 850,000 Total assets Liabilities…
- The balance sheet of the proprietorship of Jacob as of June 30, 2018 showed the following assets andliabilities:Cash P 40,000Accounts Receivable 53,600Inventory 88,000Equipment 65,600Accounts Payable 63,520The cash balance included a 200- share certificate of BW Resources common at acquisition cost of P 1,600; the current market quotation is 70 per share. Of the accounts receivable, an estimated 5% is considered to be doubtful of collection. Certain inventory items, booked at a cost of P22,960, are currently worth P16,000. Depreciation has not been recorded; the equipment, acquired two years ago, has a remaining useful life of about eight more years. Prepaid expense of P 12,800 and accrued expense of P 6,120 have not been properly recognized. Emily and Bert will join Jacob in a partnership. Jacob will invest the net assets of his business, after effecting the appropriate adjustments, and he will be allowed credit for goodwill equal to 10% of his initial capital credit. Emily and Bert…1. Done Partnership is undergoing liquidation. Information on Done is as follows: 20,000 Accounts payable 60,000 Payable to B 10,000 A; Capital (60%) 120,000 B, Capital (40%) 290,000 Cash 30,000 Accounts receivable Receivable from A 20,000 250,000 Inventory Equipment, net 200,000 Total 500,000 Total Liab. & Equity 500,000Problem1. Assume the following data for ABC Partnership had the following condensed balance sheet just before the liquidation on November 1, 2020: Assets Liabilities and Capital P 24,000 P 12,000 Cash Liabilities Non-cash assets 84,000 A, Loans A, Capital (30%) 2,400 9,600 B, Capital (50%) 48,000 36.000 C. Capital (20%) Total P108,000 P108.000 Liquidation expenses paid amounted to P1,000. Required: Compute for the total payment for each partner (including loans) using different assumptions: 1. Non-cash assets were realized at P 96,000. 2. Non-cash assets were realized at P36,000. The personal assets and liabilities of the partners on this date are as follows: Personal assets Personal liabilities A P288,000 216,000 108,000 P240,000 228,000 108,000 В
- On 1 July 2022, Kangeroo Ltd acquired all the issued shares of Koala Ltd, paying $60,000 cash and transferring 50,000 of its own shares to Koala Ltd's former shareholders. At that date, the financial statements of Koala Ltd showed the following information. Equity portion of Statement of Financial Position as at 1 July 2020: Share capital $50 ,000 General reserve 50 ,000 Retained earnings 80 ,000 All the assets and liabilities of Koala Ltd were recorded at amounts equal to their fair values at the acquisition date. The fair value of Kangeroo Ltd's shares at acquisition date was $3 per share. Kangeroo Ltd incurred $17,500 in acquisition-related costs that included $5,000 as share issue costs. Prepare the acquisition analysis at 1 July 2022 and the journal entries for Kangeroo Ltd to recognise the investment in Koala Ltd at 1 July 2022. and also Prepare the consolidation worksheet entries for Kangeroo Ltd's group at 1 July 2022.Dwani Ltd acquired all the issued shares (cum div.) of Power Ltd for $653 000 on 1 January 2022. At that date, the equity of Power Ltd was recorded as follows. Share capital $ 400 000 General reserve 88 000 Retained earnings 90 000 On 1 January 2022, the records of Power Ltd showed that the company had previously recorded a goodwill at cost of $15 000. Further, Power Ltd had a dividend payable of $25 000, the dividend to be paid in March 2022. All other assets and liabilities were carried at amounts equal to their fair values at the acquisition date, except some inventories recorded at $20 000 below their fair value. Also, Dwani ltd identified at the acquisition date a patent with a fair value of $45 000 that Power Ltd has not recorded in its own accounts. Required Prepare the acquisition analysis on 1 January 2022. Prepare the consolidation worksheet entries for Dwani Ltd’s group on 1 January 2022.…On January 1, 20x1, an entity has an outstanding note payable with carrying amount of P1,000,000. On this date, the debtor agrees to receive 10,000 shares of theentity with par value per share of P10 in full settlement of the note payable. The shares are currently selling at P75 per share. Requirements: a. Compute for the gain or loss on the derecognition of the note payable. b. Provide the entry to record the derecognition of the note payable.