1. Using the problem above, how much is the cash investment of PA RIN?2. Using the same problem, how much is the total assets? UMA, owner of UMA General Merchandising, and ASA, sole proprietor of ASA Trading, decided to combine their businesses onFebruary 15, 2021 in order to cope up with the worsening business and economic conditions. As of that date, the post-closing normalaccount balances of their businesses are as follows:UMAASACashP12,000P26,000Accounts Receivable50,00058,000Allowance for bad debts5,0008,000Notes Receivable20,000Inventories120,000100,000Prepaid Rent30,000Store Supplies9,00036,00085,000Furniture and Fixture (F & F)Office Equipment (O.E)Store equipment (S.E)Accumulated Depreciation - F& FAccumulated Depreciation - 0.EAccumulated Depreciation - S.EOther assets65,00055,0002,5007,5005,5005,50010,000Accounts payable15,00013,000Notes Payable35,00030,000UMA and ASA had the following agreement on the valuation of net assets contributed to the partnership:a. Uncollectible accounts should be established at 20% of outstanding accounts receivable.b. Notes receivable is a 1 month 12% note dated January 31, 2021. Unrecorded interest on the note shall be recognized accordingly.c. Inventories must be valued at 90% of their book values.d. Prepaid rent represents 3 months' advance payment for office space occupied by UMA which will end March 31, 2021.e. Physical count on February 15, 2021 reveals that only one third of the store supplies remains on hand.f. All fixed assets are to be 25% depreciated.g. Other assets are worthless and must be written off.h. Notes payable of UMA is a 10% note dated January 15, 2021 while that of ASA is a five month 8% note due on May 15, 2021.Interests on notes payable are not yet recorded and so must be recognized accordingly.i. UMA must withdraw cash or invest additional cash to make his capital balance equal to ASA.i. Mr. PA RIN will also be admitted to the partnership by contributing sufficient cash to have one third interests in the partnership.The partnership shall be named as UMA-ASA-PA RIN Trading and will use new sets of books.

It is an agreement between two or more parties to conduct the business and share the profits and…

UMA, owner of UMA General Merchandising, and ASA, sole proprietor of ASA Trading, decided to combine their businesses on February 15, 2021 in order to cope up with the worsening business and economic conditions. As of that date, the post-closing normal account balances of their businesses are as follows:

UMA, owner of UMA General Merchandising, and ASA, sole proprietor of ASA Trading, decided to combine their businesses on February 15, 2021 in order to cope up with the worsening business and economic conditions. As of that date, the post-closing normal account balances of their businesses are as follows:

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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