1. Ben and Bob are partners in a business selling sports wear and equipment which the organized in 2015. Profits are shared in the ratio of 1:1, respectively. Their canital balances as of December 31, 2017 were P240,000 and P260,000, respectively. Drawine accounts are always closed yearly to the capital accounts. They agreed to admit Ted uno payment of P150,000 for a 50% interest from Bench on July 1, 2018. Before admissio they agreed to update t' ir capital accounts for the following: a) net income of P250,000 for the first half of 2018 b) monthly salary drawings of P10,000 and P20,000 were made by Ben and Bob. c) revalue equipments acquired at a cost of P200,000, book value of P180,000 and a fair market value equal to 75% of its boók value. Direction: Prepare a table revising partners' equity for revaluation and equity transfer. a. Record profit share, asset revaluation and close to capital the drawings they made. b. Based on the updated capital accounts of the existing partners record the admission of Ted. c. Prepare the revised partners' equity just after admission. d. Determine the revised profit and loss ratio of the partners, assuming there was no agreement made after the purchase was made
1. Ben and Bob are partners in a business selling sports wear and equipment which the organized in 2015. Profits are shared in the ratio of 1:1, respectively. Their canital balances as of December 31, 2017 were P240,000 and P260,000, respectively. Drawine accounts are always closed yearly to the capital accounts. They agreed to admit Ted uno payment of P150,000 for a 50% interest from Bench on July 1, 2018. Before admissio they agreed to update t' ir capital accounts for the following: a) net income of P250,000 for the first half of 2018 b) monthly salary drawings of P10,000 and P20,000 were made by Ben and Bob. c) revalue equipments acquired at a cost of P200,000, book value of P180,000 and a fair market value equal to 75% of its boók value. Direction: Prepare a table revising partners' equity for revaluation and equity transfer. a. Record profit share, asset revaluation and close to capital the drawings they made. b. Based on the updated capital accounts of the existing partners record the admission of Ted. c. Prepare the revised partners' equity just after admission. d. Determine the revised profit and loss ratio of the partners, assuming there was no agreement made after the purchase was made
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:1. Ben and Bob are partners in a business selling sports wear and equipment which the
organized in 2015. Profits are shared in the ratio of 1:1, respectively. Their canital
balances as of December 31, 2017 were P240,000 and P260,000, respectively. Drawine
accounts are always closed yearly to the capital accounts. They agreed to admit Ted un
payment of P150,000 for a 50% interest from Bench on July 1, 2018. Before admission
they agreed to update t' ir capital accounts for the following:
a) net income of P250,000 for the first half of 2018
b) monthly salary drawings of P10,000 and P20,000 were made by Ben and Bob.
c) revalue equipments acquired at a cost of P200,000, book value of P180,000 and a
fair market value equal to 75% of its book value.
Direction: Prepare a table revising partners' equity for revaluation and equity transfer.
a. Record profit share, asset revaluation and close to capital the drawings they made.
b. Based on the updated capital accounts of the existing partners record the admission of
Ted.
c. Prepare the revised partners' equity just after admission.
d. Determine the revised profit and loss ratio of the partners, assuming there was no
agreement made after the purchase was made.
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