1 (An Individual and a Previous Sole Proprictor)Amores admits Andrada to a partnership interest in his business. Accounts in the ledger ofAmores on January 1, 2014, before the admission Andrade, show the following:DebitCreditP 208,000460,0001,440,000CashAccounts ReceivableMerchandise InventoryAccounts PayableAmores, CapitalP 496,0001.612,000It is agreed that for the purpose of establishing the interest of Amores. the followingadjustments shall be made:a.An allowance for uncollectible accounts of P25,000 is to be established.b.The merchandise is to be valued at PI,600,000.Prepaid expenses of P72,000 and unrecorded liability of P102,000 are to berecognized.C.Andrade is to invest sufficient cash for an equal interest in the partnership.Instructions:Assuming the new partnership will use the books of Amores, give the entries toadjust the account balances of Amores and to record the investment of Andrade.1.Assuming the new partnership will open new set of books, give the entries to recordthe investment of Amores and Andrade.3.Prepare a statement of financial position for the new partnership.

SOLUTION JOURNAL IS THE SET OF BOOK IN WHICH ALL BUSINESS TRANSACTIONS ARE RECORDED IN CHRONOLOGICAL…

1(An Individual and a Previous Sole Proprictor) Amores admits Andrada to a partnership interest in his business. Accounts in the ledger of Amores on January 1, 2014, before the admission Andrade, show the following: Debit P 208,000 Credit Cash Accounts Receivable Merchandise Inventory Accounts Payable Amores, Capital 460,000 1,440,000 P 496,000 1.612,000 It is agreed that for the purpose of establishing the interest of Amores, the following adjustments shall be made: a. An allowance for uncollectible accounts of P25,000 is to be established. b. The merchandise is to be valued at P1,600,000. Prepaid expenses of P72,000 and unrecorded liability of PI02,000 are to be recognized. C. Andrade is to invest sufficient cash for an equal interest in the partnership. Instructions: 1. Assuming the new partnership will use the books of Amores, give the entries to adjust the account balances of Amores and to record the investment of Andrade. Assuming the new partnership will open new set of books, give the entries to record the investment of Amores and Andrade. 2. 3. Prepare a statement of financial position for the new partnership.

1(An Individual and a Previous Sole Proprictor) Amores admits Andrada to a partnership interest in his business. Accounts in the ledger of Amores on January 1, 2014, before the admission Andrade, show the following: Debit P 208,000 Credit Cash Accounts Receivable Merchandise Inventory Accounts Payable Amores, Capital 460,000 1,440,000 P 496,000 1.612,000 It is agreed that for the purpose of establishing the interest of Amores, the following adjustments shall be made: a. An allowance for uncollectible accounts of P25,000 is to be established. b. The merchandise is to be valued at P1,600,000. Prepaid expenses of P72,000 and unrecorded liability of PI02,000 are to be recognized. C. Andrade is to invest sufficient cash for an equal interest in the partnership. Instructions: 1. Assuming the new partnership will use the books of Amores, give the entries to adjust the account balances of Amores and to record the investment of Andrade. Assuming the new partnership will open new set of books, give the entries to record the investment of Amores and Andrade. 2. 3. Prepare a statement of financial position for the new partnership.

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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Concept explainers

Partnership Accounting

A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.

Partner Admission and Withdrawal

A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.

Question

1 (An Individual and a Previous Sole Proprictor)
Amores admits Andrada to a partnership interest in his business. Accounts in the ledger of
Amores on January 1, 2014, before the admission Andrade, show the following:
Debit
Credit
P 208,000
460,000
1,440,000
Cash
Accounts Receivable
Merchandise Inventory
Accounts Payable
Amores, Capital
P 496,000
1.612,000
It is agreed that for the purpose of establishing the interest of Amores. the following
adjustments shall be made:
a.
An allowance for uncollectible accounts of P25,000 is to be established.
b.
The merchandise is to be valued at PI,600,000.
Prepaid expenses of P72,000 and unrecorded liability of P102,000 are to be
recognized.
C.
Andrade is to invest sufficient cash for an equal interest in the partnership.
Instructions:
Assuming the new partnership will use the books of Amores, give the entries to
adjust the account balances of Amores and to record the investment of Andrade.
1.
Assuming the new partnership will open new set of books, give the entries to record
the investment of Amores and Andrade.
3.
Prepare a statement of financial position for the new partnership.

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