On March 1, 2019, Joe and Kiks decides to combine their businesses to form a partnership. Statement of financial position on March 1 before the formation showed the following: Joe Kiks Cash P9,000 P 3,750 Accounts receivable 18,500 13,500 Inventories 30,000 19,500 Furniture and fixture (net) 30,000 9,000 Office equipment (net) 11,500 2,750 Prepaid expenses 6,375 3,000 Total P105,375 P51,500 Accounts payable P 45,750 P18,000 Capital 59,625 33,500
On March 1, 2019, Joe and Kiks decides to combine their businesses to form a
Joe Kiks
Cash P9,000 P 3,750
Inventories 30,000 19,500
Furniture and fixture (net) 30,000 9,000
Office equipment (net) 11,500 2,750
Prepaid expenses 6,375 3,000
Total P105,375 P51,500
Accounts payable P 45,750 P18,000
Capital 59,625 33,500
Total P105,375 P51,500
They agreed to following adjustments before the formation:
a. Provide 2% allowance for doubtful accounts
b. Joe’s furniture should be valued at P31,000, while Kiks’s office equipments is under depreciated by P250
c. Rent expense incurred previously by Joe was not yet recorded amounting to P1,000, while salary expense incurred by Kiks was not also recorded amounting to P800.
d. The fair value of inventories amounted to P29,500 for Joe and P21,000 for Kiks
The net (debit) credit adjustment to partner’s capital accounts are:
Joe Kiks
c P 870 (P 180)
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