a. Prepare two journal entries to set up the partnership b. Prepare a statement of financial position for the partnership as at July 1 just after formation c. Profit (before interest and salaries) on Dec 31 was 120,500. Cash withdrawals made by Bruce and Rachel amounted to 30,000 and 40,000 respectively. Prepare a profit distribution table and one entry to record the distribution.
a. Prepare two journal entries to set up the partnership b. Prepare a statement of financial position for the partnership as at July 1 just after formation c. Profit (before interest and salaries) on Dec 31 was 120,500. Cash withdrawals made by Bruce and Rachel amounted to 30,000 and 40,000 respectively. Prepare a profit distribution table and one entry to record the distribution.
a. Prepare two journal entries to set up the partnership b. Prepare a statement of financial position for the partnership as at July 1 just after formation c. Profit (before interest and salaries) on Dec 31 was 120,500. Cash withdrawals made by Bruce and Rachel amounted to 30,000 and 40,000 respectively. Prepare a profit distribution table and one entry to record the distribution.
Bruce and Rachel agree to form a partnership on July 1. Bruce, who has been trading as a sole proprietor, will invest certain business assets at agreed valuations, transfer his business liabilities and contribute sufficient cash to bring his total contribution to a 60% interest over the new business. Details of Bruce's assets and liabilities are given below (please see the attached image)
Rachel agrees to bring in inventory with a value of P146,500 and P93,500 in cash for a 40% interest in the partnership.
The partners have agreed on the following:
a) capital accounts will remain fixed;
b) 12% interest profit computed on capital;
c) salaries of P30,000 each for 2019 but will be twice this amount next year and thereafter;
d)10% interest charge on partners' drawings made beyond the agreed salaries; and
e)remaining profits are to be shared equally.
Directions:
a. Prepare two journal entries to set up the partnership
b. Prepare a statement of financial position for the partnership as at July 1 just after formation
c. Profit (before interest and salaries) on Dec 31 was 120,500. Cash withdrawals made by Bruce and Rachel amounted to 30,000 and 40,000 respectively. Prepare a profit distribution table and one entry to record the distribution.
d. Set up the general ledger (T Accounts) accounts to show each partner's equity.
e. Prepare a statement of changes in partners equitv.
Transcribed Image Text:Bruce and Rachel agree to form a partnership on July 1. Bruce, who has been trading as a
sole proprietor, will invest certain business assets at agreed valuations, transfer his
business liabilities and contribute sufficient cash to bring his total contribution to a 60%
interest over the new business. Details of Bruce's assets and liabilities are given below.
Agreed value
P 30,000
138,000
240,000
200,000
14,000
8.
Book value
P32,000
240,000
322,000
200,000
14,000
Accounts Receivable
Inventory
Equipment
Accounts Payable
Notes Payable
Rachel agrees to bring in inventory with a value of P146,500 and P93,500 in cash for a
40% interest in the partnership.
The partners have agreed on the following:
a) capital accounts will remain fixed;
b) 12% interest profit computed on capital;
c) salaries of P30,000 each for 2019 but will be twice this amount next year and thereafter;
d) 10% interest charge on partners' drawings made beyond the agreed salaries; and
e) remaining profits are to be shared equally.
Direction:
Prepare two journal entries to set up the partnership.
b. Prepare a statement of financial position for the partnership as at July 1 just after formation.
c. Profit (before interest and salaries) on Dec. 31 was P120,500. Cash withdrawals
made by Bruce and Rachel amounted to P30,000 and P40,000, respectively. Prepare
a.
a profit distribution table and one entry to record the distribution.
d.
Set up the general ledger (T Accounts) accounts to show each partner's equity.
e. Prepare a statement of changes in partners' equitv.
ang aorned P250 000 before tax with
Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.
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