A and B decided to form a partnership on January I, 2021. Their Statements of Financial Position on this date were:   A B Cash 62,625 164,063 Accounts Receivable 1,487,500 896,875 Merchandise Inventory 875,000 885,938 Equipment 656,250 1,268,750 Total 3,084,375 3,215,625     A B Accounts payable 459,375 1,159,375 A, Capital 2,625,000   B, Capital   2,056,250 Total 3,084,375 3,215,625 They agreed the following adjustments shall be made: - Equipment of A is under depreciated by P87,500 and that B is over depreciated by P131,250. - Allowance for doubtful accounts is to be set up amounting to P297,500 for A and P196,875 for B. - Inventories of P21, 875 and P15,312 are worthless in the books of A and B respectively. - The partnership agreement provides for a profit and loss ratio of 70% to A and 30% to B Assuming that the capital balances are to be equaled to their P&L Ratio, how much is the capital of A and B, respectively?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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A and B decided to form a partnership on January I, 2021. Their Statements of
Financial Position
on this date were:

  A B
Cash 62,625 164,063
Accounts Receivable 1,487,500 896,875
Merchandise Inventory 875,000 885,938
Equipment 656,250 1,268,750
Total 3,084,375 3,215,625

 

  A B
Accounts payable 459,375 1,159,375
A, Capital 2,625,000  
B, Capital   2,056,250
Total 3,084,375 3,215,625

They agreed the following adjustments shall be made:
- Equipment of A is under depreciated by P87,500 and that B is over depreciated by
P131,250.
- Allowance for doubtful accounts is to be set up amounting to P297,500 for A and
P196,875 for B.
- Inventories of P21, 875 and P15,312 are worthless in the books of A and B
respectively.
- The partnership agreement provides for a profit and loss ratio of 70% to A and 30%
to B


Assuming that the capital balances are to be equaled to their P&L Ratio, how much is the capital of A and B, respectively?

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