On January 1, 2019, Ben and Len have capital balances of P 3,000,000 and P 2,750,000, respectively. On this day, they decided to admit Ken by making him contribute his land worth P 1,500,000 and cash of P 175,000 for a 25% interest in the partnership. Profit and loss ratio of Ben and Len is 60:40.
During 2019, the partnership incurred a net income of P 180,000. On January 1,2020, the partners agreed to admit Jen for a 20% interest in the partnership by making her pay 1,500,000 because on this date the land of the partnership is not fairly valued. The partnership incurred a loss of P 50,000 for year 2020 and on June 1, 2020, Ben invested an additional amount of cash of P 45,000.
On December 31, 2020, Len decided to retire from the partnership and the remaining partners agreed to pay her an amount equal to 120% of her capital balance at the time of her retirement from the partnership.
1. What are the balances of the capital accounts of Ben and Len after the admission of Ken?
2. Prepare the entries regarding the admission of Ken to the partnership.
3. What are the balances of the capital accounts of Ben, Len & Ken on December 31, 2019?
