Final answer:
The statement is false; the correct entry for Lad's purchase of Rima's equity would also account for the overpayment difference, with Rima's capital credited by P15,000 and Lad's capital credited by P20,000.
Step-by-step explanation:
The statement regarding the entry on the partnership books to record the transfer of Partner Rima's equity interest in the firm to Lad is false. When Lad purchases Rima's equity interest for P20,000, the journal entry would not involve crediting Lad's capital account directly. Instead, Rima's capital account would be credited by the amount of her equity in the firm, which is P15,000, because this is the amount being transferred out of her account. Lad's capital account would be credited by the amount he paid, P20,000, but it should also reflect the overpayment of P5,000, which would be treated separately, for example, as a bonus to the exiting partner or as goodwill if the partnership agreement allows for it.
The essential concept here is reflected in the T-account, where the left side records the assets and the right side records liabilities and net worth or equity. For a partnership, each partner's capital account shows their share of the net worth of the business. The transaction should be recorded accurately to maintain the balance of assets, liabilities, and equity properly.