Davis has decided to retire from the partnership of Davis, Eiser, and Foreman. The partnership will pay Davis P200,000. Goodwill is to be recorded in the transaction as implied by the excess payment to Davis. A summary balance sheet for the Davis, Eiser, and Foreman partnership appears below. Davis, Eiser, and Foreman share profits and losses in a ratio of 1:1:3, respectively. Assets Cash 75,000 Inventory 82,000 Marketable securities 38,000 Land 150,000 Building-net 255,000 Total assets 600,000 Equities Davis, capital 160,000 Eiser, capital 140,000 Foreman, capital 300,000 Total equities 600,000 What goodwill will be recorded? P40,000. P120,000. P160,000. P200,000. What partnership capital will Eiser have after Davis retires? P100,000. P140,000. P180,000. P220,000. What partnership capital will Foreman have after Davis retires? P240,000. P300,000. P360,000. P420,000.
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.
- Davis has decided to retire from the
partnership of Davis, Eiser, and Foreman. The partnership will pay Davis P200,000.Goodwill is to be recorded in the transaction as implied by the excess payment to Davis. A summary balance sheet for the Davis, Eiser, and Foreman partnership appears below. Davis, Eiser, and Foreman shareprofits and losses in a ratio of 1:1:3, respectively. Assets Cash 75,000 Inventory 82,000 Marketable securities 38,000 Land 150,000 Building-net 255,000 Total assets 600,000 Equities Davis, capital 160,000 Eiser, capital 140,000 Foreman, capital 300,000 Total equities 600,000 What goodwill will be recorded? - P40,000.
- P120,000.
- P160,000.
- P200,000.
- What partnership capital will Eiser have after Davis retires?
- P100,000.
- P140,000.
- P180,000.
- P220,000.
- What partnership capital will Foreman have after Davis retires?
- P240,000.
- P300,000.
- P360,000.
- P420,000.
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