Liza is admitted into the partnership for a 50% interest in the profits and losses of the partnership. The old partners Maria, Leonora and Theresa are to retain their original capital and profit-sharing relationships to each other and are to transfer sufficient amount (50%) of their own capital accounts to Liza to accomplish his admission as planned. O agreed to pay ₱50,000 to Maria, Leonora and Theresa. The capital balances of Maria, Leonora and Theresa before Liza admission are ₱20,000 , ₱20,000 and ₱30,000, respectively. Profit and Loss ratio of Maria, Leonora and Theresa are 20:30:50 respectively. 

Required:

A. Prepare the journal entry necessary to record this transaction.

 B. How should the ₱50,000 cash be divided to Maria, Leonora and Theresa

Answer rating: 100% (QA)

A Journal Entry To record the admission of Liza into the partnership Cash Payment to Old Partners De... View the full answer