FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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On July 1, 2020, Wency and William agreed to form a partnership from their respective proprietorship businesses and to share profits equally. Wency and William’s balance sheet before the formation were:

 

Wency

William

Cash

P     6,000

P   15,000

Accounts receivable

36,000

21,000

Merchandise inventory

99,000

126,000

Prepaid rent

 

12,000

Store equipment

120,000

90,000

Accum. Depreciation

(  45,000)

(    54,000)

Building

375,000

 

Accum. Depreciation

(75,000)

 

Land

   180,000

              -

  Totals

P 696,000

P 210,000

Accounts payable

P   22,500

P     9,000

Mortgage payable

180,000

-

Capital

   493,500

   201,000

  Totals

P 696,000

P 210,000

 

The fair values of Wency’s and William’s assets were:

 

Wency

William

Merchandise inventory

P   81,000

P 135,000

Prepaid rent

-

0

Store equipment

45,000

19,500

Building

750,000

-

Land

300,000

-

How much capital will be credited to Wency?

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