a. The allowance for doubtful accounts is over set-up by P3,000. b. Merchandise should be valued at P105,000 due to obsolescence. c. The equipment is under depreciated by P15,000. d. Accounts Payable was overstated by P4,000 due to recording of an expense. Required: 1. Compute the capital account balance of Cadua prior to partnership formation.
a. The allowance for doubtful accounts is over set-up by P3,000. b. Merchandise should be valued at P105,000 due to obsolescence. c. The equipment is under depreciated by P15,000. d. Accounts Payable was overstated by P4,000 due to recording of an expense. Required: 1. Compute the capital account balance of Cadua prior to partnership formation.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
I need the answers from 1-5 please.
Transcribed Image Text:John Mark Cadua who has been in business for a quite long time has decided to venture
in partnership business with Michael Auditor. The Statement of Financial Position of
Cadua prior to the inception of the partnership revealed the folļowing balances
Cash
P 85,000
Accounts Receivable
60,000
4,000
120,000
150,000
30,000
80,000
Allowance for Doubtful Accounts
Merchandise
Equipment
Acc. Depreciation-Equipment
Accounts Payable
J. Cadua, Capital
As agreed, Auditor will contribute cash equal to one-half (1/2) of the capital balance ei
Cadua after taking into account the following adjustments:
a. The allowance for doubtful accounts is over set-up by P3,000.
b. Merchandise should be valued at P105,000 due to obsolescence.
c. The equipment is under depreciated by P15,000.
d. Accounts Payable was overstated by P4,000 due to recording of an expense.
Required:
1. Compute the capital account balance of Cadua prior to partnership formation.
Transcribed Image Text:Partnership - Nature and Formation
. Prepare the necessary adjusting entries in the book of Cadua by directly effecting his
capital account.
3. Prepare a journal entry to close the book of Cadua.
4. Prepare a journal entry to open the book of the partnership. This will record the
contribution of Cadua and Auditor.
5. Prepare a Statement of Financial Position after the partnership formation.
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