Answered: a fair value of P32,000. During 2009,…

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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Banayo and his very close fiend Buendia formed a partnership on January 1, 2009 with Banayo contributing P160,000 cash and Buendia contributing equipment with a book value of P64,000 and a fair value of P48,000, and inventory items with a book value of P24,000 and a fair value of P32,000. During 2009, Buendia made additional investment of P16,000 on April 1, and P16,000 on June 1. On September 1, he withdrew P40,000. Banayo had no additional investment nor withdrawals during the year. The average capital balance at the end of the fiscal year 2009 for Buendia

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement 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, and drawings of a partner.

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