2 (Two Sole Proprietors Form a Partnership; Books of one of the Sole Proprietors to be used by the Partnership) On October 1, 2014, April and Arias decided to pool their assets and form a partnership. The firm is to take over business assets and assume business liabilities; equities are to-be based on net assets transferred after the following adjustments: a. Arias' inventory is to be valued at P350,000. An allowance for uncollectible accounts of P9,000 and P7,500, respectively should be set up. b. Accrued expenses of P21,000 are to be recognized on April's books. c. d. Arias is to contribute sufficient cash to give him a 60% interest in the new firm.

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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2 (Two Sole Proprietors Form a Partnership; Books of one of the Sole
Proprietors to be used by the Partnership)
On October 1, 2014, April and Arias decided to pool their assets and form a partnership.
The firm is to take over business assets and assume business liabilities; equities are to-be
based on net assets transferred after the following adjustments:
Arias' inventory is to be valued at P350,000.
a.
An allowance for uncollectible accounts of P9,000 and P7,500, respectively should
be set up.
b.
Accrued expenses of P21,000 are to be recognized on April's books.
c.
d.
Arias is to contribute sufficient cash to give him a 60% interest in the new firm.
Statements of financial position for April and Arias on October 1 before adjustments are
presented below.
April
P 187,500
450,000
400,000
250,000
( 112,500)
P 1,175,000
Arias
P 112,500
375,000
300,000
300,000
( 37,500)
P 1,050,000
Cash
Accounts Receivable
Merchandise Inventory
Equipment
Accumulated Depreciation
Total Assets
P 250,000
Accounts Payable
Capital
Total Liabilities and Capital
345,000
830,000
P 1,175,000
800,000
P 1,050,000
Instructions:
Give the entries to adjust and close the books of April.
1.
Give the entries required on the books of Arias upon the formation of the
partnership.
2.
3.
Prepare a statement of financial position for the new partnership of April and Arias.
Transcribed Image Text:2 (Two Sole Proprietors Form a Partnership; Books of one of the Sole Proprietors to be used by the Partnership) On October 1, 2014, April and Arias decided to pool their assets and form a partnership. The firm is to take over business assets and assume business liabilities; equities are to-be based on net assets transferred after the following adjustments: Arias' inventory is to be valued at P350,000. a. An allowance for uncollectible accounts of P9,000 and P7,500, respectively should be set up. b. Accrued expenses of P21,000 are to be recognized on April's books. c. d. Arias is to contribute sufficient cash to give him a 60% interest in the new firm. Statements of financial position for April and Arias on October 1 before adjustments are presented below. April P 187,500 450,000 400,000 250,000 ( 112,500) P 1,175,000 Arias P 112,500 375,000 300,000 300,000 ( 37,500) P 1,050,000 Cash Accounts Receivable Merchandise Inventory Equipment Accumulated Depreciation Total Assets P 250,000 Accounts Payable Capital Total Liabilities and Capital 345,000 830,000 P 1,175,000 800,000 P 1,050,000 Instructions: Give the entries to adjust and close the books of April. 1. Give the entries required on the books of Arias upon the formation of the partnership. 2. 3. Prepare a statement of financial position for the new partnership of April and Arias.
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