ABC, a sole proprietor, agreed to form a partnership with EFG in a business. Accounts in the ledger for ABCon September 30, 2021, just before the formation show the following balances:P 26,000120,000180,000Accounts PayableАВС, СаpitalP 62,000264,000CashAccounts ReceivableMerchandise InventoryIt is agreed that for purposes of establishing ABCS interest, the following adjustments should be made:An allowance for doubtful accounts of 2% of accounts receivable is to be established.The merchandise inventory is to be valued at P202,000.Prepaid expenses of P6,500 and accrued liabilities of P4,000 are to be established.EFG is to invest sufficient funds in order to receive a 1/3 interest in the partnership.How much must EFG contribute?4.

Fund Contribution of New Partner: An owner or partner may make a capital donation to a firm or…

Answered: ABC, a sole proprietor, agreed to form…

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter6: Audit Evidence

Section: Chapter Questions

Problem 15CYBK

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. On July 1, 2021, A, B, and C formed a joint venture for the sale of merchandise. A was designated as the n=managing participant. Profits or losses are to be divided as follows: A – 50%; B-25% and C-25%. On October 1, 2021, though the joint venture is still uncompleted, the participant agreed to recognize profit or loss on the venture to date. The cost of inventory on hand is determined at P25,000. The joint venture account has a debit balance of P15,000 before distribution of profit and loss. No separate set of books is maintained for the joint venture and the participants record in their individual books all venture transactions. a. The joint venture profit (loss) on October 1, 2021 is a. P10,000 b. P25,000 c. (P15,000) d. None . Using the sme information above and the joint venture account has a venture profit (loss) is а. (Р55,000) credit balance of P30,000, the joint b. P55,000 с. (Р5,000) d. P5,000
Illustration 1. Share-for-share exchangesOn January 1, 2022, Frank Co. and Richard, Inc. combined. As of this date, the fair values of the assets, liabilities and equity of Frank and Richard before the business combination are as follows: On the negotiation for the business combination, the acquirer incurred the followingtransaction costs: P45,000.00 for legal fees; P 5,000.00 for due diligence cost and P 80,000.00 for the general admin cost and cost of maintaining an internal acquisition department. Case 1: before the transaction, Frank, Co. have 7,000 outstanding shares. Frank Co. Issued additional 10,000 shares as consideration for a 100% interest in Richard. Frank’s shares currently sells P150 per share in the market, while Richard’s shares are quoted at P200 per share.With the stated facts, answer the following:1. How much is the transaction costs incurred during the business combination?a. P 50,000.00b. P 75,000.00c. P 150,000.00d. P 130,000.002. How much is the par value of each…
Illustration 1. Share-for-share exchangesOn January 1, 2022, Frank Co. and Richard, Inc. combined. As of this date, the fair values of the assets, liabilities and equity of Frank and Richard before the business combination are as follows: On the negotiation for the business combination, the acquirer incurred the followingtransaction costs: P45,000.00 for legal fees; P 5,000.00 for due diligence cost and P 80,000.00 for the general admin cost and cost of maintaining an internal acquisition department. Case 1: before the transaction, Frank, Co. have 7,000 outstanding shares. Frank Co. Issued additional 10,000 shares as consideration for a 100% interest in Richard. Frank’s shares currently sells P150 per share in the market, while Richard’s shares are quoted at P200 per share.With the stated facts, answer the following: 1. How much is the goodwill (gain on bargain purchase) on the business combination?…
Illustration 1. Share-for-share exchangesOn January 1, 2022, Frank Co. and Richard, Inc. combined. As of this date, the fair values of the assets, liabilities and equity of Frank and Richard before the business combination are as follows: On the negotiation for the business combination, the acquirer incurred the followingtransaction costs: P45,000.00 for legal fees; P 5,000.00 for due diligence cost and P 80,000.00 for the general admin cost and cost of maintaining an internal acquisition department. Case 2: before the transaction, Richard, Inc. have 20,000 outstanding shares. Richard issued 12,000 shares as consideration for a 60% interest in Frank. Richard’s shares currently sell P55 per share in the market, while Frank’s shares are quoted at P225 per share. Richard, Inc. elected to measure NCI at “proportionate share”. With the stated facts, answer the following: 20.How much is the total Goodwill in the books of Richard, Inc. after the business combination?a. P 140,000.00b. P…
Illustration 1. Share-for-share exchangesOn January 1, 2022, Frank Co. and Richard, Inc. combined. As of this date, the fair values of the assets, liabilities and equity of Frank and Richard before the business combination are as follows: On the negotiation for the business combination, the acquirer incurred the followingtransaction costs: P45,000.00 for legal fees; P 5,000.00 for due diligence cost and P 80,000.00 for the general admin cost and cost of maintaining an internal acquisition department. Case 2: before the transaction, Richard, Inc. have 20,000 outstanding shares. Richard issued 12,000 shares as consideration for a 60% interest in Frank. Richard’s shares currently sell P55 per share in the market, while Frank’s shares are quoted at P225 per share. Richard, Inc. elected to measure NCI at “proportionate share”. With the stated facts, answer the following: 16.How much is the Non-Controlling Interest in the acquiree?a. P 0.00b. P 454,500.00c. P 400,000.00d. P…
Illustration 1. Share-for-share exchangesOn January 1, 2022, Frank Co. and Richard, Inc. combined. As of this date, the fair values of the assets, liabilities and equity of Frank and Richard before the business combination are as follows: On the negotiation for the business combination, the acquirer incurred the followingtransaction costs: P45,000.00 for legal fees; P 5,000.00 for due diligence cost and P 80,000.00 for the general admin cost and cost of maintaining an internal acquisition department. Case 1: before the transaction, Frank, Co. have 7,000 outstanding shares. Frank Co. Issued additional 10,000 shares as consideration for a 100% interest in Richard. Frank’s shares currently sells P150 per share in the market, while Richard’s shares are quoted at P200 per share. With the stated facts, answer the following: 4. How much is the Non-Controlling Interest in the acquiree?a. P 0.00b. P 150,000.00c. P 310,000.00d. P 500,000.005. How much is the previously held equity interest in…
Illustration 1. Share-for-share exchanges On January 1, 2022, Frank Co. and Richard, Inc. combined. As of this date, the fair values of the assets, liabilities and equity of Frank and Richard before the business combination are as follows: On the negotiation for the business combination, the acquirer incurred the following transaction costs: P45,000.00 for legal fees; P 5,000.00 for due diligence cost and P 80,000.00 for the general admin cost and cost of maintaining an internal acquisition department. Case 1: before the transaction, Frank, Co. have 7,000 outstanding shares. Frank Co. Issued additional 10,000 shares as consideration for a 100% interest in Richard. Frank’s shares currently sells P150 per share in the market, while Richard’s shares are quoted at P200 per share. With the stated facts, answer the following: 1.How much is the Share Premium of the combined company after the business combination?a. P 730,000.00b. P 1,230,000.00c. P 800,000.00d. P 1,700,000.002.How much is…
Please answer in good accounting form. Thankyou On January 1, 2019, Heirloom International entered into a joint agreement classified as a joint venture. For an investment of ₱1,000,000, Heirloom International obtained 30% interest in Rice Joint Venture, Inc. During the year, Rice Joint Ventures, Inc. reported profit of ₱2,000,000 and other comprehensive income of ₱500,000, for a total comprehensive income of ₱2,500,000. Rice Joint Venture, Inc. declared dividends of ₱1,600,000 during the year. How much is the carrying amount of the investment in joint venture on December 31, 2019?
On January 1, 2021, Entity A and Entity B incorporated AB Company. The contractual agreement provided that the decisions on relevant activities will require the unanimous consent of both Entity A and Entity B, and they will have right to the net assets of AB Company. Entity A and Entity B invested P400,000 and P600,000 respectively, equivalent to 40:60 capital interest of AB Company. The financial statements of AB Company provided the following data for its two-year operation (see image below).1. How much is the balance of Investment in Joint Venture to be reported by Entity B in its Statement of Financial Position at December 31, 2022? 2. How much is the balance of Investment in Joint Venture to be reported by Entity A in its Statement of Financial Position at December 31, 2021? _______________
Benjamin Inc. and Victor Inc. agreed to combine as of January 1, 2023. The book value and fair value of Victor's accounts on that date (prior to creating the combination) follow, along with the book value of Benjamin's accounts: Current assets Building and equipment (net) Liabilities Common Stock Additional paid-in capital Retained earnings, 1/1/2023 O $200,000. Benjamin Book Value $50,000. O $70,000. O $90,000. Victor Book Value $420,000 $170,000 $230,000 790,000 410.000 480,000 620,000 380,000 380,000 400,000 90,000 Victor Fair Value 70,000 30,000 120,000 80,000 Assume that Benjamin issued 10,000 shares of common stock with a $5 par value and a $40 fair value to obtain all of Victor's outstanding stock. In addition, Benjamin paid legal costs of $8,000 in connection with the acquisition and $4,000 in stock issue costs, which is not yet reflected in the information above. On its acquisition-date consolidated balance sheet, what amount should Beaver report as goodwill?
account balance. Assume that nt of downstream intra-entity profits against its share of Sheridan's income. b. Prepare a consolidated worksheet to determine appropriate balances for external financial reporting as of December 31, 2024. Complete this question by entering your answers in the tabs below. Required A Required B Show how Pulaski determined the $409,651 Investment in Sheridan account balance. Assume that Pulaski defi of downstream intra-entity profits against its share of Sheridan's income. Note: Amounts to be deducted should be indicated with a minus sign. Consideration transferred Increase in Sheridan's retained earnings 1/1/23 to 1/1/24 Excess fair value amortization 2023 ending inventory profit deferral Pulaski's equity in earnings of Stinson for 2024 Sheridan 2024 dividends declared to Pulaski Investment account balance 12/31/24 Required A $(20,340) + $362,400 (20,340) $342,060 Required B >
Pab Corporation decided to establish Sollon Company as a wholly owned subsidiary by transferring some of its existing assets and liabilities to the new entity. In exchange, Sollon issued Pab 34,000 shares of $7 par value common stock. The following information is provided on the assets and accounts payable transferred: Cash Inventory Land Buildings Equipment Accounts Payable Required A Required: a. Prepare the journal entry that Pab recorded for the transfer of assets and accounts payable to Sollon b. Prepare the journal entry that Sollon recorded for the receipt of assets and accounts payable from Pab. Complete this question by entering your answers in the tabs below. Required B View transaction list Cost $ 38,000 89,000 61,000 174,000 99,000 45,000 A Prepare the journal entry that Pab recorded for the transfer of assets and accounts payable to Sollon. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Journal entry…

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