Answered: How much is the book value of the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Light, Day and Fire of Sunshine Partnership with a profit and loss sharing ratio of 25%, 15% and 60% respectivelyhas the following account balances:
>DUring June, some non cash assets were sold that resulted to a loss of P20,000. Liquidation expenses of P31,000 were paid and additional expenses amounting to P24,000 were expected to be incurred through the following month of liquidating the partnership.
> Liabilities to outsiders amounting to P79,000 were paid.
> For Fire to receive P31,000 on the first distribution of cash, How much is the book value of the unsold Non-cash assets ?

DEBITS
CREDITS
Cash
105000 Liabilities
131000
Non Cash Assets
970000 Loan From Fire
25000
Loan to Day
48000 Light, Cap
280000
Receivable from Light
11000 Day, Cap
406000
Expenses
639000 Fire, Cap
564000
Revenues
367000
Total
1773000
1773000

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement 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, and drawings of a partner.

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