4. On January 31, 2021, partners L, M and N had the following loan and capital account balances (after closing entries for January): Loan Receivable from L Loan Payable to N L, Capital M, Capital N, Capital P20,000 dr 60,000 cr 30,000 dr 120,000 cr 70,000 cr The partnership's income sharing ratio was L- 50%, M – 20%, and N – 30%. On January 31, 2021, O was admitted to the partnership for a 20% interest in total capital of the partnership in exchange for an investment of P40,000 cash. Prior to O's admission, the existing partners agreed to increase the carrying amount of the partnership's inventories to current fair value, a P60,000 increase. The capital account to be credited to O:
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.
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