Answered: How much is the capital interest of A…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter15: Partnership Accounting

Section: Chapter Questions

Problem 1PA: The partnership of Tatum and Brook shares profits and losses in a 60:40 ratio respectively after...

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On January 1, 20x1, A and B formed a partnership the AB partnership. A and B share profits and losses in a 40:60 ratio, respectively. The following are information available on the date of formation:

	A	B
Cash	100,000	25,000
Inventory		300,000
Land		500,000
Building	300,000
Accounts payable	50,000

The accounts payable of A will be paid by partner A using his personal assets. The land contributed by B has a mortgage liability of P150,000 which was assumed by the partnership.

How much is the capital interest of A and B after formation? 400,000 and 675,000.
Assuming the partners agree to revalue the assets, so that their capital interest will agree to their profit and loss sharing ratio, which of the following statements is incorrect? The total capital contribution of the partners is P1,125,000.

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