FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question

3. How much capital will be credited to Cindy?

Problem I Ariel, Beauty and Cindy decided to form Disprin Partnership with 2:2:1 profit sharing. Both Ariel and Beauty have existing business. The balance sheet of the two are shown below together with their agreement prior to formation. Ariel Beauty Cash 117 126 Accounts Receivables 100 200 Inventories 50 30 Equipment 80 Furniture 30 Prepayments 15 ТOTAL 352 401 Accounts Payable Capital 75 95 277 306 TOTAL 352 401 Partners' agreements: Receivables are 97% collectible Ariel's inventories fair values is at P55 while P10 of Beauty's Inventories were damaged and are only 30% recoverable. The equipment is underdepreciated by P3 and the furniture's value will increase by P4. P2 of Ariel's prepayments were already exhausted while Beauty has unrecorded liability of P7. Cindy will contribute sufficient cash to give her 20% interest 1. How much capital will be credited to Ariel? 2. How much capital will be credited to Beauty? 3. How much capital will be credited to Cindy? 4. How much is the total assets of the newly-formed partnership?
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Transcribed Image Text:Problem I Ariel, Beauty and Cindy decided to form Disprin Partnership with 2:2:1 profit sharing. Both Ariel and Beauty have existing business. The balance sheet of the two are shown below together with their agreement prior to formation. Ariel Beauty Cash 117 126 Accounts Receivables 100 200 Inventories 50 30 Equipment 80 Furniture 30 Prepayments 15 ТOTAL 352 401 Accounts Payable Capital 75 95 277 306 TOTAL 352 401 Partners' agreements: Receivables are 97% collectible Ariel's inventories fair values is at P55 while P10 of Beauty's Inventories were damaged and are only 30% recoverable. The equipment is underdepreciated by P3 and the furniture's value will increase by P4. P2 of Ariel's prepayments were already exhausted while Beauty has unrecorded liability of P7. Cindy will contribute sufficient cash to give her 20% interest 1. How much capital will be credited to Ariel? 2. How much capital will be credited to Beauty? 3. How much capital will be credited to Cindy? 4. How much is the total assets of the newly-formed partnership?
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