1. As of July 1, 2020, MM and AA decided to form a partnership. Their balance sheets on this date are:  Cash                                               P 15,000     P 38,000 Accounts Receivable                       680,000     255,000 Allowance for doubtful accounts   (140,000)    (30,000) Merchandise Inventory                                     202,000 Machinery and Equipment              150,000     270,000 Total                                                P705,000   P735,000 Accounts Payable                            135,000     240,000 MM, capital                                     570,000 AA, capital -                                                       495,000 Total                                                P705,000   P735,000 The partners agreed that the machinery and equipment of MM is under depreciated by P15,000 and that of AA by P45,000. Allowances for doubtful accounts is to be set up amounting to P120,000 for MM and P40,000 for AA. The partnership agreement provides for the profit and loss ratio and capital interest of 60% to MM and 40% to AA with AA’s capital as base. How much cash must MM invest to bring the partner's capital balances proportionate to their profit and loss ratio?

1. As of July 1, 2020, MM and AA decided to form a partnership. Their balance sheets on this date are: 

Cash                                               P 15,000     P 38,000
Accounts Receivable                       680,000     255,000
Allowance for doubtful accounts   (140,000)    (30,000)
Merchandise Inventory                                     202,000
Machinery and Equipment              150,000     270,000
Total                                                P705,000   P735,000

Accounts Payable                            135,000     240,000
MM, capital                                     570,000
AA, capital -                                                       495,000
Total                                                P705,000   P735,000

The partners agreed that the machinery and equipment of MM is under depreciated by P15,000 and that of AA by P45,000. Allowances for doubtful accounts is to be set up amounting to P120,000 for MM and P40,000 for AA. The partnership agreement provides for the profit and loss ratio and capital interest of 60% to MM and 40% to AA with AA’s capital as base. How much cash must MM invest to bring the partner's capital balances proportionate to their profit and loss ratio?

2. 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
Accounts Receivable          14,200
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 partnership.

Question 1: Z's adjusted capital before the admission of A is?

Question 2: The amount cash investment by A is?