Calculation of new profit sharing ratio | |
Total share | 100% |
Adison's share | 20% |
Remaining share | 80% |
Main's new share (80%*70%) | 56% |
Capital's new share (80%*30%) | 24% |
New ratio | |
Main's new share | 56% |
Capital's new share | 24% |
Adison's share | 20% |
1)
Total new capital (150000/20%) | $ 7,50,000 |
Partner | New capial | Old capital | Differece |
Main's new share ( | $ 4,20,000 | $ 4,20,000 | $ - |
Capital's new share | $ 1,80,000 | $ 1,80,000 | $ - |
Adison share | $ 1,50,000 | $ - | $ 1,50,000 |
Totals | $ 7,50,000 | $ 6,00,000 | $ 1,50,000 |
Cash | $ 1,50,000 | |
Adison Capital | $ 1,50,000 | |
(Admission of Adison for 20% share) |
2)
Total new capital (185000/20%) | $ 9,25,000 |
Partner | New capial | Old capital | Differece |
Main's new share ( | $ 5,18,000 | $ 4,20,000 | $ 98,000 |
Capital's new share | $ 2,22,000 | $ 1,80,000 | $ 42,000 |
Adison share | $ 1,85,000 | $ - | $ 1,85,000 |
Totals | $ 9,25,000 | $ 6,00,000 | $ 3,25,000 |
Cash | $ 3,25,000 | |
Main Capital | $ 98,000 | |
First Capital | $ 42,000 | |
Adison Capital | $ 1,85,000 | |
(Admission of Adison for 20% share) |
3)
Total new capital (120000/20%) | $ 6,00,000 |
Partner | New capial | Old capital | Differece |
Main's new share ( | $ 3,36,000 | $ 4,20,000 | $ (84,000) |
Capital's new share | $ 1,44,000 | $ 1,80,000 | $ (36,000) |
Adison share | $ 1,20,000 | $ - | $ 1,20,000 |
Totals | $ 6,00,000 | $ 6,00,000 | $ - |
Cash | $ 1,20,000 | |
Main Capital | $ 84,000 | |
First Capital | $ 36,000 | |
Adison Capital | $ 1,20,000 | |
Cash | $ 1,20,000 | |
(Admission of Addison for 20% share) |
Exercise 12-9 Ad mission of new partner LO P3 The Struter Partnership has total partners' equity of $600,000, wh...
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