Magdaraog and Mercado are partners in Magdaraog and Mercado Partnership with capital balances of P550,000 and P350,000, respectively; they share income and loss in the ratio 1:3, respectively. The partners are considering the admission of San Pedro. Required: (Show your solutions)Prepare the entries to record the admission of San Pedro under each of the following independent situations:San Pedro invested P100,000 cash in the partnership for a one-tenth interest. The net assets of the partnership are fairly valued.San Pedro invested P140,000 cash in the partnership for a one-eight interest. Assets of the partnership are fairly valued except for equipment, which is undervalued by P80,000. Net assets of the partnership are to be revalued and San Pedro is to be admitted.San Pedro is to receive a one-tenth interest in the partnership upon investing P180,000 cash. Net assets of the partnership are fairly valued. San Pedro is to be admitted using the bonus method.San Pedro is to receive 20% interest in the partnership upon investing P200,000 cash. Net assets of the partnership are fairly valued. San Pedro is to be admitted using the bonus method.

Partnership is an agreement between two or more persons come together, form a separate business…

Answered: Magdaraog and Mercado are partners in…

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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Magdaraog and Mercado are partners in Magdaraog and Mercado Partnership with capital balances of P550,000 and P350,000, respectively; they share income and loss in the ratio 1:3, respectively. The partners are considering the admission of San Pedro.

Required: (Show your solutions)

Prepare the entries to record the admission of San Pedro under each of the following independent situations:

San Pedro invested P100,000 cash in the partnership for a one-tenth interest. The net assets of the partnership are fairly valued.
San Pedro invested P140,000 cash in the partnership for a one-eight interest. Assets of the partnership are fairly valued except for equipment, which is undervalued by P80,000. Net assets of the partnership are to be revalued and San Pedro is to be admitted.
San Pedro is to receive a one-tenth interest in the partnership upon investing P180,000 cash. Net assets of the partnership are fairly valued. San Pedro is to be admitted using the bonus method.
San Pedro is to receive 20% interest in the partnership upon investing P200,000 cash. Net assets of the partnership are fairly valued. San Pedro is to be admitted using the bonus method.

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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