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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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