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 113 126 Accounts Receivables 200 100 Inventories 50 50 Equipment 80 0 Furniture 0 30 Prepayments 5 15 TOTAL 448 321 Accounts Payable 75 95 Capital 373 226 TOTAL 448 321 Partners' agreements: Receivables are 97% collectible Ariel's inventories fair values is at P49 while P20 of Beauty's Inventories were damaged and are only 30% recoverable. The equipment is overdepreciated by P5 and the furniture's value will decrease by P4. P3 of Ariel’s prepayments were already exhausted while Beauty has unrecorded liability of P3. 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?
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Ariel, Beauty and Cindy decided to form Disprin
The balance sheet of the two are shown below together with their agreement prior to formation.
Ariel
Beauty
Cash
113
126
200
100
Inventories
50
50
Equipment
80
0
Furniture
0
30
Prepayments
5
15
TOTAL
448
321
Accounts Payable
75
95
Capital
373
226
TOTAL
448
321
Partners' agreements:
Receivables are 97% collectible
Ariel's inventories fair values is at P49 while P20 of Beauty's Inventories were damaged and are only 30% recoverable.
The equipment is overdepreciated by P5 and the furniture's value will decrease by P4.
P3 of Ariel’s prepayments were already exhausted while Beauty has unrecorded liability of P3.
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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