Question

Gonzaga and Magada have capital account balances of P30,000 and P20,000, respectively, and they share profits and losses in a 3:1 ratio. Required: Prepare the journal entries to record the admission of Padilla under each of the following conditions: 1. Padilla invested P30,000 for a one-fourth interest in net assets; the total partnership capital after Padilla's admission will be P80,000. 2. Padilla invested P30,000, of which P10,000 is a bonus to Gonzaga and Magada. In conjunction with the admission of Padilla, the carrying amount of the inventories is increased by P16,000. Padilla's capital account is credited for P20,000.

Answer 1

Answer:

1. Padilla invested P30,000 for a one-fourth interest in net assets; the total partnership capital after Padilla's admission will be P80,000. 

2. Padilla invested P30,000, of which P10,000 is a bonus to Gonzaga and Magada. In conjunction with the admission of Padilla, the carrying amount of the inventories is increased by P16,000. Padilla's capital account is credited for P20,000.