FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Z admits A as a partner in business. Accounts in the ledger for Z on November 20, 2018, just before the admission of A, show the following balances:
Cash P 6,800
Merchandise Inventory 20,000
Prepaid expense 1,000
Accounts Payable 9,000
Z, Capital 33,000
It is agreed that the purposes of establishing Z's interest the following adjustments shall be made:
a) An allowance for doubtful accounts of 3% of accounts receivable is to be established
b) The merchandise inventory is to be valued at P23,000.
c) Prepaid salary expenses of P600 and accrued rent expense of P800 are to be recognized.
A is to invest sufficient cash to obtain a 1/3 interest in the
(1) Z's adjusted capital before the admission of A; and (2) the amount cash investment by A:
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