A Sole Proprietor and an Individual with No Business Form a Partnership On Apr. 8, 2020, Tolentino who has her own retail business and Tan, decided to form a partnership wherein they will divide profits in the ratio of 40:60, respectively. The statement of financial position of Tolentino is as follows: Tolentino Marketing Statement of Financial Position April 8, 2020 Assets Cash P 4,000 Accounts Receivable P160,000 Less: Allowance for Uncollectible Accounts 16.000 144,000 Inventory 200,000 Equipment P 50,000 Less: Accumulated Depreciation 10.000 40.000 Total Assets P388.000 Liabilities and Capital Accounts Payable P 36,000 Tolentino, Capital 352.000 Total Liabilities and Capital P388,000 Conditions agreed upon before the formation of the partnership: a. The accounts receivable of Tolentino is estimated to be 70% realizable. b. The accumulated depreciation of the equipment will be increased by P10,000. c. The accounts payable will be assumed by the partnership. d. The capital of the partnership is based on the adjusted capital balance of Tolentino. Tan is o contribute cash in order to make the partner's capital balances proportionate to the profit and loss ratio. Required: Prepare the necessary journal entries in the books of Tolentino.
A Sole Proprietor and an Individual with No Business Form a Partnership On Apr. 8, 2020, Tolentino who has her own retail business and Tan, decided to form a partnership wherein they will divide profits in the ratio of 40:60, respectively. The statement of financial position of Tolentino is as follows: Tolentino Marketing Statement of Financial Position April 8, 2020 Assets Cash P 4,000 Accounts Receivable P160,000 Less: Allowance for Uncollectible Accounts 16.000 144,000 Inventory 200,000 Equipment P 50,000 Less: Accumulated Depreciation 10.000 40.000 Total Assets P388.000 Liabilities and Capital Accounts Payable P 36,000 Tolentino, Capital 352.000 Total Liabilities and Capital P388,000 Conditions agreed upon before the formation of the partnership: a. The accounts receivable of Tolentino is estimated to be 70% realizable. b. The accumulated depreciation of the equipment will be increased by P10,000. c. The accounts payable will be assumed by the partnership. d. The capital of the partnership is based on the adjusted capital balance of Tolentino. Tan is o contribute cash in order to make the partner's capital balances proportionate to the profit and loss ratio. Required: Prepare the necessary journal entries in the books of Tolentino.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:A Sole Proprietor and an Individual with No Business Form a Partnership
On Apr. 8, 2020, Tolentino who has her own retail business and Tan, decided to form a
partnership wherein they will divide profits in the ratio of 40:60, respectively. The statement of
financial position of Tolentino is as follows:
Tolentino Marketing
Statement of Financial Position
April 8, 2020
Assets
Cash
P 4,000
Accounts Receivable
P160,000
Less: Allowance for Uncollectible Accounts
16.000
144,000
Inventory
200,000
Equipment
P 50,000
Less: Accumulated Depreciation
10.000
40,000
Total Assets
P388,000
Liabilities and Capital
Accounts Payable
P 36,000
Tolentino, Capital
352.000
Total Liabilities and Capital
P388,000
Conditions agreed upon before the formation of the partnership:
a. The accounts receivable of Tolentino is estimated to be 70% realizable.
b. The accumulated depreciation of the equipment will be increased by P10,000.
c. The accounts payable will be assumed by the partnership.
d. The capital of the partnership is based on the adjusted capital balance of Tolentino. Tan is to
contribute cash in order to make the partner's capital balances proportionate to the profit
and loss ratio.
Required: Prepare the necessary journal entries in the books of Tolentino.
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