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  1. business
  2. accounting
  3. on march 1, 2016, a and b invested in its first ye

On March 1, 2016, A and B invested in its first year of operations the...

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Accounting

On March 1, 2016, A and B invested in its first year of operations the following cash: A, P480,000 and B, P240,000.

 

The partners agree to allocate profits and losses as follows:  

 

A and B will be allowed a monthly salary of P48,000 and P24,000, respectively.  
The partners will be allowed with interest of 10% of their capital balances at the beginning of each year.  
The remainder will be divided on the bases of their beginning capital for the first year of operation and equally for the subsequent years.  
Each partner is allowed to withdraw up to P24,000 a year. Any withdrawal in excess will be treated as a direct reduction from their capital balances.
 

In 2016, the partnership suffered a net loss of P36,000. But in 2017 they earned a net profit of P132,000. The partners withdrew the maximum amount from the partnership each year. On January 1, 2018, a new partner, C was admitted in the partnership for an investment of P400,000 for a 40% interest. No revaluation of assets is to be recorded. After the admission of C, the partners agreed to divide profits and losses, 4:2:4, to A, B and C respectively.

 

Requirement: On January 1, 2018, what is the entry to record the admission of C?

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