2. Psalm and Selah decided to form a partnership on June 30, 2030, Assets contributed by the partners are:                                                           Psalm                            Selah    Book Value Fair Value Book Value Fair value Cash P375,000 P375,000 P875,000 P875,000 Merchandise inventory 95,000 125,000     Furniture and fixtures 350,000 312,500 872,500 937,500 Transportation equipment     3,262,500 2,812,500   The transportation equipment is subject to a mortgage loan of P1,125,000, which is to be assumed by the partnership. The partnership agreement provides that Psalm and Selah share profits and losses of 30% and 70% respectively. Assuming that the partners agreed to bring their respective capital in proportion to their profit and loss ratio, using Selah capital as base. How much additional cash is to be invested (withdrawn) by Psalm? A. P(687,500) B. P(987,500) C. P 875,000 D. P 687,500

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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2. Psalm and Selah decided to form a partnership on June 30, 2030, Assets contributed by the partners are:

                                                          Psalm                            Selah 

  Book Value Fair Value Book Value Fair value
Cash P375,000 P375,000 P875,000 P875,000
Merchandise inventory 95,000 125,000    
Furniture and fixtures 350,000 312,500 872,500 937,500
Transportation equipment     3,262,500 2,812,500

 

The transportation equipment is subject to a mortgage loan of P1,125,000, which is to be assumed by the partnership. The partnership agreement provides that Psalm and Selah share profits and losses of 30% and 70% respectively.

Assuming that the partners agreed to bring their respective capital in proportion to their profit and loss ratio, using Selah capital as base. How much additional cash is to be invested (withdrawn) by Psalm?

A. P(687,500)
B. P(987,500)
C. P 875,000

D. P 687,500

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