Partners A, B and C had the following balances prior to admission of D: A, Loan (debit):
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Question:
Partners A, B and C had the following balances prior to admission of D:
A, Loan (debit): P 20, 000;
B, Loan (credit): P 60, 000;
A, Capital (debit): P 30, 000;
B, Capital (credit): P 120, 000;
C, Capital (credit): P 70, 000.
Partners A, B and C share profits and losses in the ratio 5:2:3 respectively.
D is admitted in the partnership for a 20% interest in the partnership in exchange for an investment of P 40, 000 cash. Prior to admission of D, the partners agreed to increase the carrying value of inventories by P 60, 000 in order to bring it to its fair value. Immediately after the admission, the capital credit of D would be
Expert Answer:
Before we start solving the problem let us prepare the Balance Sheet of A B C Partnership Firm prior ... View the full answer
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