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1. Upon the partnership's formation, the respective capital of partners John and Jones would be? 2. Under Bonus Method, if the partner agreed to have a capital ratio of 40:60 for John and Jones respectively, how much is the amount of bonus to or (from) John? 3. Under Bonus Method, if the partner agreed to have a capital ratio of 40:60 for John and Jones respectively, how much is the adjusted capital of Jones?

1. Upon the partnership's formation, the respective capital of partners John and Jones would be? 2. Under Bonus Method, if the partner agreed to have a capital ratio of 40:60 for John and Jones respectively, how much is the amount of bonus to or (from) John? 3. Under Bonus Method, if the partner agreed to have a capital ratio of 40:60 for John and Jones respectively, how much is the adjusted capital of Jones?

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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On January 1, 2020, the business assets and liabilities of John and Jones were as follows: John Jones Cash 35,000 90,000 Receivables 200,000 600,000 Inventories 113,000 172,000 Land, buildings, and equipment 650,000 535,000 Other assets 2,000 3,000 180,000 250,000 Accounts payable Notes payable 200,000 350,000 John and Jones agreed to form a partnership by contributing their net assets, subject to the following adjustments: Receivables of P20,000 in John's books and P40,000 in Jones' books are uncollectible. Inventories of P6,000 and P7,000 in the respective books of John and Jones are worthless. Other assets in the books are to be written off. Questions: 1. Upon the partnership's formation, the respective capital of partners John and Jones would be? 2. Under Bonus Method, if the partner agreed to have a capital ratio of 40:60 for John and Jones respectively, how much is the amount of bonus to or (from) John? 3. Under Bonus Method, if the partner agreed to have a capital ratio of 40:60 for John and Jones respectively, how much is the adjusted capital of Jones? 4. Under Bonus Method, if the partner agreed to have a capital ratio of 60:40 for John and Jones respectively and they further agreed to have a total capital of P1,500,000, how much is the amount of bonus to or (from) John?
Transcribed Image Text:On January 1, 2020, the business assets and liabilities of John and Jones were as follows: John Jones Cash 35,000 90,000 Receivables 200,000 600,000 Inventories 113,000 172,000 Land, buildings, and equipment 650,000 535,000 Other assets 2,000 3,000 180,000 250,000 Accounts payable Notes payable 200,000 350,000 John and Jones agreed to form a partnership by contributing their net assets, subject to the following adjustments: Receivables of P20,000 in John's books and P40,000 in Jones' books are uncollectible. Inventories of P6,000 and P7,000 in the respective books of John and Jones are worthless. Other assets in the books are to be written off. Questions: 1. Upon the partnership's formation, the respective capital of partners John and Jones would be? 2. Under Bonus Method, if the partner agreed to have a capital ratio of 40:60 for John and Jones respectively, how much is the amount of bonus to or (from) John? 3. Under Bonus Method, if the partner agreed to have a capital ratio of 40:60 for John and Jones respectively, how much is the adjusted capital of Jones? 4. Under Bonus Method, if the partner agreed to have a capital ratio of 60:40 for John and Jones respectively and they further agreed to have a total capital of P1,500,000, how much is the amount of bonus to or (from) John?
5. Under Bonus Method, if the partner agreed to have a capital ratio of 60:40 for John and Jones respectively, and they further agreed to have a total capital of P1,500,000, how much is the adjusted capital of John? 6. If the partners agreed that John should withdraw or invest in order to have a capital ratio of 40%, how much should be the amount of additional investment or withdrawal? 7. If the partners agreed that John should withdraw or invest in order to have a capital ratio of 40%, how much is the adjusted capital of John and Jones? 8. If the partner agreed to revalue assets to maintain 40:60 capital ratio for John and Jones respectively, how much is the adjusted capital of John? 9. If the partner agreed to revalue assets to maintain 40:60 capital ratio for John and Jones respectively, how much is the adjusted capital of Jones? 10. If the partner agreed to effect revaluation down of assets to maintain 40:60 capital ratio for John and Jones respectively, how much is the adjusted capital of John?
Transcribed Image Text:5. Under Bonus Method, if the partner agreed to have a capital ratio of 60:40 for John and Jones respectively, and they further agreed to have a total capital of P1,500,000, how much is the adjusted capital of John? 6. If the partners agreed that John should withdraw or invest in order to have a capital ratio of 40%, how much should be the amount of additional investment or withdrawal? 7. If the partners agreed that John should withdraw or invest in order to have a capital ratio of 40%, how much is the adjusted capital of John and Jones? 8. If the partner agreed to revalue assets to maintain 40:60 capital ratio for John and Jones respectively, how much is the adjusted capital of John? 9. If the partner agreed to revalue assets to maintain 40:60 capital ratio for John and Jones respectively, how much is the adjusted capital of Jones? 10. If the partner agreed to effect revaluation down of assets to maintain 40:60 capital ratio for John and Jones respectively, how much is the adjusted capital of John?
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