Handout

Accounting for Partnerships

A. Adding a Partner

At February 15, 2023 the capital balances and the profit/loss ratios in the

DDD partnership were as follows.

Partners

Donaldson, D.

Drapier, S.

Dong, N.

Capital

Balance

$ 125,000

100,000

75,000

$ 300,000

Profit/ Loss

Ratio

50%

40%

30%

The next day, on February 16, 2023, S. Dharma is admitted to the partnership for 10% share capital by investment. After Dharma's admission, the total partnership capital is $340,000.

Required: Answer the following questions.

1. How much was Dharma's cash investment in the partnership?
2. What was the total bonus allocated to the old partners?
3. What is the balance in each partner's capital account after Dharma's admission to the partnership?