Erik, John and Nate were partners with capital balances on January 2, 2020 of P70,000, P84,000 and P56,000, respectively. Their profit and loss sharing ratio is 3:5:2. On July 1, 2020, Erik retires from the 21 partnership. On the date of retirement the partnership net profit from operations is P48,000. The partners agreed further to pay Erik P76,560 in settlement of his interest. How much will be the capital of John after the retirement of Erik?
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Erik, John and Nate were partners with capital balances on January 2, 2020 of P70,000, P84,000 and
P56,000, respectively. Their
21
agreed further to pay Erik P76,560 in settlement of his interest.
How much will be the capital of John after the retirement of Erik?
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