The balance sheet of the proprietorship of Jacob as of June 30, 2018 showed the following assets and liabilities: Cash P 40,000 Accounts Receivable 53,600 Inventory 88,000 Equipment 65,600 Accounts Payable 63,520 The cash balance included a 200- share certificate of BW Resources common at acquisition cost of P 1,600; the current market quotation is 70 per share. Of the accounts receivable, an estimated 5% is considered to be doubtful of collection. Certain inventory items, booked at a cost of P22,960, are currently worth P16,000. Depreciation has not been recorded; the equipment, acquired two years ago, has a remaining useful life of about eight more years. Prepaid expense of P 12,800 and accrued expense of P 6,120 have not been properly recognized. Emily and Bert will join Jacob in a partnership. Jacob will invest the net assets of his business, after effecting the appropriate adjustments, and he will be allowed credit for goodwill equal to 10% of his initial capital credit. Emily and Bert will each contribute cash to secure the respective interests of 1/3 and 1/6, respectively. a. Jacob’s goodwill credit would be: b. Emily’ cash investment would be: c. Total capital would be: d. Total assets would be:
The
liabilities:
Cash P 40,000
Inventory 88,000
Equipment 65,600
Accounts Payable 63,520
The cash balance included a 200- share certificate of BW Resources common at acquisition cost of P 1,600; the current market quotation is 70 per share. Of the accounts receivable, an estimated 5% is considered to be doubtful of collection. Certain inventory items, booked at a cost of P22,960, are currently worth P16,000.
a. Jacob’s goodwill credit would be:
b. Emily’ cash investment would be:
c. Total capital would be:
d. Total assets would be:
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