A Sole Proprietor and an Individual with No Business Form a Partnership On Apr. 8, 2020, Tolentino who has her own retail business and Tan, decided to form a partnership wherein they will divide profits in the ratio of 40:60, respectively. The statement of financial position of Tolentino is as follows: Tolentino Marketing Statement of Financial Position April 8, 2020 Assets Cash P 4,000 Accounts Receivable P160,000 Less: Allowance for Uncollectible Accounts 16,000 144,000 Inventory 200,000 Equipment P 50,000 Less: Accumulated Depreciation 10,000 40,000 Total Assets P388,000 Liabilities and Capital Accounts Payable P 36,000 Tolentino, Capital 352,000 Total Liabilities and Capital P388,000 Conditions agreed upon before the formation of the partnership: a. The accounts receivable of Tolentino is estimated to be 70% realizable. b. The accumulated depreciation of the equipment will be increased by P10,000. c. The accounts payable will be assumed by the partnership. d. The capital of the partnership is based on the adjusted capital balance of Tolentino. Tan is e contribute cash in order to make the partner's capital balances proportionate to the profit and loss ratio. Required: Prepare the opening journal entries in the books of the partnership
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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