Formation and Operations of a Partnership On June 30, San Mateo and Caballes formed a partnership. The partners agreed to invest equal amounts of capital. San Mateo invested his proprietorship's assets and liabilities as follows: San Mateo's Fair Market Book Value Value Accounts Receivable P 72,000 P 72,000 Allowance for Uncollectible Accounts -0- 10,500 Merchandise Inventory Prepaid Expenses Office Equipment Accumulated Depreciation Accounts Payable 223,400 241,000 17,000 276,000 17,000 459,000 153,000 191,000 -0- 191,000 On June 30, Caballes invested cash in an amount equal to the current market value of San Mateo's partnership capital. San Mateo, the managing partner, would earn two- thirds of partnership profits. Caballes agreed to accept one-third of the profits. During the remainder of the year, the partnership earned P450,000. The temporary withdrawals of San Mateo and Caballes were P352,000 and P230,000, respectively. Required: 1. Journalize the partners' initial investments in a new set of books. 2. Prepare the partnership's statement of financial position immediately after its formation on June 30. 3. Journalize the entries to close the income summary and the drawing accounts.

Formation and Operations of a Partnership On June 30, San Mateo and Caballes formed a partnership. The partners agreed to invest equal amounts of capital. San Mateo invested his proprietorship's assets and liabilities as follows: San Mateo's Fair Market Book Value Value Accounts Receivable P 72,000 P 72,000 Allowance for Uncollectible Accounts -0- 10,500 Merchandise Inventory Prepaid Expenses Office Equipment Accumulated Depreciation Accounts Payable 223,400 241,000 17,000 276,000 17,000 459,000 153,000 191,000 -0- 191,000 On June 30, Caballes invested cash in an amount equal to the current market value of San Mateo's partnership capital. San Mateo, the managing partner, would earn two- thirds of partnership profits. Caballes agreed to accept one-third of the profits. During the remainder of the year, the partnership earned P450,000. The temporary withdrawals of San Mateo and Caballes were P352,000 and P230,000, respectively. Required: 1. Journalize the partners' initial investments in a new set of books. 2. Prepare the partnership's statement of financial position immediately after its formation on June 30. 3. Journalize the entries to close the income summary and the drawing accounts.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

The following s the trail Balance of X and Y Co. as on March 31, 2021. The partners sharing profits and losses in the ratio 2:1. Prepare the Income Statement, Profit & Loss Appropriation A/c, Partners' Capital A/c and the Balance Sheet. Particulars Dr. Particulars Cr. Land and Buildings 637500 X Capital A/c 191250 Y Capital A/c 85000 Sundry creditors 170000 Sales (net) 85000 Discount 76500 Provision for bad debts 212500 Commission 6375 Y's Loan A/c 212500 Plant and Machinery 127500 Wages Opening Stock of Finished Goods Opening Stock of Raw material Opening Stock of Work in Progress Sundry debtors Carriage inwards Carriage outwards Factory Expenses Royalties 106250 1381250 10625 6375 42500 127500 3825 31875 6375 Purchase of Raw material (net) 318750 Factory rent & taxes Discount 27625 0. 12325 17000 8500 0. Office rent Insurance Bad debts Office Expenses Salaries of works manager 6375 31875 S1000 Cash at bank 34850 2014500 The following additional information is to be taken into…
Problem 1: On January 1, 20x1, Rody and Noy formed a partnership. Rody and Noy contributed the following assets at formation: Rody Noy Cash 25,000 37,500 Inventory 18,750 Building 50,000 Equipment 18,750 The building is subject to a P12,500 mortgage, which was assumed by the partnership. They share profit and loss in the ratio of 60:40. Assuming Rody will invest (withdraw) cash so that his capital balance will equal to his profit and loss ratio, what is the total asset of the partnership after formation? (The correct answer is 246,875 but I need a solution/explanation)
On June 30, 2021, William and Bryan formed a partnership. The partners agreed to invest equalamounts of capital. William invested his proprietorship’s assets and liabilities as follows: Book Value Fair Market ValueAccounts Receivable Php 720,000 Php 720,000Allowance for Doubtful Accounts - 0 - 100,500Merchandise Inventory 233,000 241,000Prepaid Expenses 117,000 117,000Office Equipment 459,000 276,000Accumulated Depreciation 153,000 - 0 -Accounts Payable 191,000…
The following is the trail Balance of X and Y Co. as on March 31, 2021. The partners sharing profits and losses in the ratio 2:1. Prepare the Income Statement, Profit & Loss Appropriation A/c, Partners' Capital A/c and the Balance Sheet. Particulars Dr. Particulars Cr. Land and Buildings 187500 x Capital A/c 56250 Y Capital A/c 25000 Sundry creditors 50000 Sales (net) 25000 Discount 22500 Provision for bad debts 62500 37500 Plant and Machinery Wages 31250 Opening Stock of Finished Goods 406250 3125 Opening Stock of Raw material Opening Stock of Work in Progress 1875 Sundry debtors 62500 Commission 12500 Carriage inwards 1875 Y's Loan A/c 37500 Carriage outwards 1125 Factory Expenses 9375 Royalties 1875 Purchase of Raw material (net) 93750 Factory rent & taxes 8125 Discount 3625 Office rent 5000 Insurance 2500 Bad debts 1875 Office Expenses 9375 Salaries of works manager 15000 Cash at bank 10250 592500 The following additional information is to be taken into consideration: 592500…
Two sole proprietors L and M agreed to form a partnership on January 31, 20x4. The trial balance for each proprietor is shown below as of January 1, 20x4 L Cash Account receivable, net Merchandise inventory Building, net Furniture and fixtures, net Accounts payable Mortgage payable BOOK VALUE L, Capital M, Capital L FAIR VALUE 40,000.00 52,000.00 M BOOK VALUE M 40,000.00 60,000.00 100,000.00 94,000.00 100,000.00 114,000.00 280,000.00 320,000.00 250,000.00 280,000.00 60,000.00 64,000.00 40,000.00 44,000.00 110,000.00 110,000.00 200,000.00 200,000.00 230,000.00 80,000.00 80.000.00 150,000.00 150,000.00 260,000.00 The L and M partnership will take over the assets an assume the liabilities of the proprietors as of January 1, 20x4 FAIR VALUE 30,000.00 30,000.00 70,000.00 56,000.00 REQUIRED: A. Determine the following items after formation of the partnership. (1) Total assets, (2) Total liabilities, and (3) Total capital
Revaluing and Contributing Assets to a Partnership Marquis Westbury invested $46,000 in the Trenton and Rainwater partnership for ownership equity of $46,000. Prior to the investment, equipment was revalued to a market value of $317,000 from a book value of $242,000. Daniel Trenton and Ann Marie Rainwater share net income in a 1:3 ratio. Required: a. Provide the journal entry for the revaluation of equipment. If an amount box does not require an entry, leave it blank. Equipment Daniel Trenton, Capital Ann Marie Rainwater, Capital Feedback Check My Work Cash 75,000 b. Provide the journal entry to admit Westbury. If an amount box does not require an entry, leave it blank. Marquis Westbury, Capital 18,750
Exercise 3-2 (Division of Profit; Interest on Average Capital) Danica and Jenson are partners. Their capital accounts during the fiscal year 2019 were as follows: Danica, Capital 120,000 1/1 800,000 4/1 160,000 60,000 J enson. Capital 3/1 180,000 1/1 1,200,000 7/1 9/1 140,000 11/1 10/1 100,000 Profit of the partnership is P250,000 for the year. Determine the partners shared profit under the following assumptions: 1. Each partner is to be credited 12% interest on his average capital. 2. Any remaining profit or loss is to be divided equally. Follow the instructions strictly
Exercise 3-2 (Division of Profit; Interest on Average Capital) Danica and Jenson are partners. Their capital accounts during the fiscal year 2019 were as follows: Danica, Capital 120,000 1/1 800,000 4/1 160,000 11/1 60,000 J enson. Capital 3/1 180,000 1/1 1,200,000 7/1 9/1 140,000 100,000 10/1 Profit of the partnership is P250,000 for the year. Determine the partners shared profit under the following assumptions: 1. Each partner is to be credited 12% interest on his average capital. 2. Any remaining profit or loss is to be divided equally. Follow thle instructions strictly
EXERCISE 9. Journal Entries: Admission by investment of assets. The real accounts in the ledger of Chua-Tay Partnership showed the following balances before the admission of Melan to the partnership: Cash P 60,000 Accounts Receivable 70,000 Merchandise Inventory 55,000 Machinery 120,000 Accumulated Depreciation - Machinery 21,600 Accounts Payable 40,000 Income Taxes Payable 35,000 Notes Payable 65,000 | Chua, Capital (50%) 58,400 Tay, Capital (50%) 85,000 Additional information: • The parties agreed to revalue the following: (a) Accounts Receivable at 85%; (b) Merchandise Inventory at 110%; and (c) Machinery at 90%. • They also agreed that additional interest of P3,500 on notes payable be accrued. • Melan was to contribute P140,000. It was agreed that after the admission of Melan, all partners' capital balances would equal to the contribution of Melan. Any partner whose capital balance would be below the threshold should contribute additional cash to the partnership. Prepare and upload…
The following is the trail Balance of X and Y Co. as on March 31, 2021. The partners sharing profits and losses in the ratio 2:1. Prepare the Income Statement, Profit & Loss Appropriation A/c, Partners' Capital A/c and the Balance Sheet. Particulars Dr. Particulars Cr. 375000 x Capital A/c 112500 Y Capital A/c 50000 Sundry creditors 100000 Sales (net) 50000 Discount Land and Buildings Plant and Machinery 125000 75000 Wages 62500 Opening Stock of Finished Goods 812500 Opening Stock of Raw material Opening Stock of Work in Progress Sundry debtors 6250 45000 Provision for bad debts 3750 125000 Commission 3750 Y's Loan A/c 2250 25000 Carriage inwards 75000 Carriage outwards Factory Expenses 18750 Royalties 3750 Purchase of Raw material (net) 187500 16250 7250 10000 Factory rent & taxes Discount Office rent Insurance 5000 3750 18750 30000 20500 1185000 The following additional information is to be taken into consideration: Bad debts Office Expenses Salaries of works manager Cash at bank…
Exercise 3-2 (Division of Profit; Interest on Average Capital) Danica and Jenson are partners. Their capital accounts during the fiscal year 2019 were as follows: Danica, Capital 120,000 1/1 Jenson, Capital 3/1 180,000 1/n 1,200,000 140,000 100,000 9/1 800,000 160,000 60,000 4/1 7/1 11/1 10/1 Profit of the partnership is P250,000 for the year. Determine the partners shared profit under the following assumptions: 1. Each partner is to be credited 12% interest on his average capital. 2. Any remaining profit or loss is to be divided equally.
k The Pen, Evan, and Torves Partnership has asked you to assist in winding-up its business affairs. You compile the following information: 1. The partnership's trial balance on June 30, 20X1, is Cash Accounts Receivable (net) Inventory Plant and Equipment (net) Accounts Payable Pen, Capital Evan, Capital Torves, Capital Total Profit and loss percentages Preliquidation capital balances Loss absorption potential (capital balances/loss percent) Decrease highest LAP to next highest Debit $ 7,808 34,000 24,808 99,908 Decrease LAPs to next highest: $ 164,908 2. The partners share profits and losses as follows: Pen, 50 percent; Evan, 25 percent; and Torves, 25 percent. 3. The partners are considering an offer of $110,000 for the firm's accounts receivable, inventory, and plant and equipment as of June 30. The $110,000 will be paid to creditors and the partners in installments, the number and amounts of which are to be negotiated. Required: Prepare a cash distribution plan as of June 30, 20X1,…