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1. Carrot joins the partnership of Apple and Banana. The partnership's statement of financial position before Carrot's admission is as follows Cash Accounts receivable |Inventory Equipment Total Assets 30, 000 140, 000 | 200, 000 500, 000 870, 000 Accounts Payable | Apple, Capital (60%) Banana, Capital (40%) 80, 000 515, 000 275, 000 | Total liab & Equity 870, 000 The following adjustments are determined: A. The recoverable amount of the accounts receivable is P120, 000. B. The inventory has a net realizable value of P160, 000. C. The equipment has a fair value of P450, 000. D. Unrecorded liabilities amount to P20, 000. Solutions: Case 1: Purchase of interest from one partner Carrot acquires half of Banana's capital interest for P800, 000. Requirements: Provide journal entry and determine tho capital balances and P/L ratio of the partners after Carrot's admission.

1. Carrot joins the partnership of Apple and Banana. The partnership's statement of financial position before Carrot's admission is as follows Cash Accounts receivable |Inventory Equipment Total Assets 30, 000 140, 000 | 200, 000 500, 000 870, 000 Accounts Payable | Apple, Capital (60%) Banana, Capital (40%) 80, 000 515, 000 275, 000 | Total liab & Equity 870, 000 The following adjustments are determined: A. The recoverable amount of the accounts receivable is P120, 000. B. The inventory has a net realizable value of P160, 000. C. The equipment has a fair value of P450, 000. D. Unrecorded liabilities amount to P20, 000. Solutions: Case 1: Purchase of interest from one partner Carrot acquires half of Banana's capital interest for P800, 000. Requirements: Provide journal entry and determine tho capital balances and P/L ratio of the partners after Carrot's admission.

FINANCIAL ACCOUNTING
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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1. Carrot joins the partnership of Apple and Banana. The partnership's statement of financial position before Carrot's admission is as follows Cash Accounts receivable Inventory Equipment Total Assets 30, 000 140, 000 200, 000 500, 000 | 870, 000 Accounts Payable Apple, Capital (60%) Banana, Capital (40%) 80, 000 515, 000 275, 000 Total liab & Equity 870, 000 The following adjustments are determined: A. The recoverable amount of the accounts receivable is P120, 000. B. The inventory has a net realizable value of P160, 000. C. The equipment has a fair value of P450, 000. D. Unrecorded liabilities amount to P20, 000. Solutions: Case 1: Purchase of interest from one partner Carrot acquires half of Banana's capital interest for P800, 000. Requirements: Provide journal entry and determine the capital balances and P/L ratio of the partners after Carrot's admission. Case 1: Carrying amts. 30,000 Fair values Increase (Decrease) Cash Accounts receivable Inventory Equipment Accounts payable Accrued liabilities Net assets 30,000 140,000 200,000 500,000 (80,000) 120,000 160,000 450,000 (20,000) (40,000) (50,000) (80,000) (20.000) 660,000 (20,000) (130,000) 790,000 Apple 60% Banana 40% Carrot Total Capital, beg. 515,000 275,000 790,000 Revaluation decrease (78,000) (52,000) (130,000) Acjiusted, before admission 437,000 223,000 660,000 Sale from Banana to Carrot Capital after admission (111,500) 111,500 437,000 111,500 111,500 660,000 Date Banana, Capital (223,00 x 1/2) Carrot, Capital (223,00 x 1/2) 111,500 111,500 Admission of Partner Before admission Carrot After admission 60% 60% Apple Banana 40% -20% 20% Carrot 20% 20% 100% 100%
Transcribed Image Text:1. Carrot joins the partnership of Apple and Banana. The partnership's statement of financial position before Carrot's admission is as follows Cash Accounts receivable Inventory Equipment Total Assets 30, 000 140, 000 200, 000 500, 000 | 870, 000 Accounts Payable Apple, Capital (60%) Banana, Capital (40%) 80, 000 515, 000 275, 000 Total liab & Equity 870, 000 The following adjustments are determined: A. The recoverable amount of the accounts receivable is P120, 000. B. The inventory has a net realizable value of P160, 000. C. The equipment has a fair value of P450, 000. D. Unrecorded liabilities amount to P20, 000. Solutions: Case 1: Purchase of interest from one partner Carrot acquires half of Banana's capital interest for P800, 000. Requirements: Provide journal entry and determine the capital balances and P/L ratio of the partners after Carrot's admission. Case 1: Carrying amts. 30,000 Fair values Increase (Decrease) Cash Accounts receivable Inventory Equipment Accounts payable Accrued liabilities Net assets 30,000 140,000 200,000 500,000 (80,000) 120,000 160,000 450,000 (20,000) (40,000) (50,000) (80,000) (20.000) 660,000 (20,000) (130,000) 790,000 Apple 60% Banana 40% Carrot Total Capital, beg. 515,000 275,000 790,000 Revaluation decrease (78,000) (52,000) (130,000) Acjiusted, before admission 437,000 223,000 660,000 Sale from Banana to Carrot Capital after admission (111,500) 111,500 437,000 111,500 111,500 660,000 Date Banana, Capital (223,00 x 1/2) Carrot, Capital (223,00 x 1/2) 111,500 111,500 Admission of Partner Before admission Carrot After admission 60% 60% Apple Banana 40% -20% 20% Carrot 20% 20% 100% 100%
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