Answered: an invests P160,000 in a partnership…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Cunanan invests P160,000 in a partnership for a 1/4 interest. Prior to Cunanan's admission, the partnership had two partners with capital balances of P190,000 each. If no asset revaluation is recognized prior to Cunanan's admission, what amount is credited to his capital account?

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement 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, and drawings of a partner.

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