Homework Help is Here – Start Your Trial Now!
Business
Accounting
AA's investment in the partnership is the AA Company. The balance sheet of AA Company on the date of formation follows: Liabilities and Capital Accounts payable Notes payable AA, Capital Assets Cash 60,000 Accounts receivable - net 288,000 432,000 420,000 1,200,000 318,000 372,000 510,000 Inventory Office equipment Total assets Total liabilities and capital 1,200,000 The office equipment is net of accumulated depreciation of P120,000. The partners agreed that the inventory is worth P510,000, and the office equipment is worth half its original cost. The notes payable will not be assume by the partnership. Compute the partner's capital under Bonus method.

AA's investment in the partnership is the AA Company. The balance sheet of AA Company on the date of formation follows: Liabilities and Capital Accounts payable Notes payable AA, Capital Assets Cash 60,000 Accounts receivable - net 288,000 432,000 420,000 1,200,000 318,000 372,000 510,000 Inventory Office equipment Total assets Total liabilities and capital 1,200,000 The office equipment is net of accumulated depreciation of P120,000. The partners agreed that the inventory is worth P510,000, and the office equipment is worth half its original cost. The notes payable will not be assume by the partnership. Compute the partner's capital under Bonus method.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

Compute the partner's capital under bonus method.

On June 30, 2012, AA Company a sole proprietorship expands the company and establishes a partnership with BB and CC. The partners agreed to share profits and losses as follows: AA, 50%; BB, 25%; CC, 25%. They further agreed that the beginning capital balances of the partners will reflect the same ratio. BB is to contribute P40,000 cash and a transportation equipment that has an original cost of P520,000, book value of P420,000, and a fair market value of P370,000. The transportation equipment is subject to a P242,000 mortgage that the partnership will assume. CC, on the other hand, will invest P66,000 cash and marketable securities costing P252,000 but currently worth P345,000. AA's investment in the partnership is the AA Company. The balance sheet of AA Company on the date of formation follows: Liabilities and Capital Accounts payable Notes payable AA, Capital Assets Cash 60,000 288,000 318,000 Accounts receivable - net 372,000 510,000 Inventory Office equipment 432,000 420,000 Total assets 1,200,000 Total liabilities and capital 1,200,000 The office equipment is net of accumulated depreciation of P120,000. The partners agreed that the inventory is worth P510,000, and the office equipment is worth half its original cost. The notes payable will not be assume by the partnership. Compute the partner's capital under Bonus method.
Transcribed Image Text:On June 30, 2012, AA Company a sole proprietorship expands the company and establishes a partnership with BB and CC. The partners agreed to share profits and losses as follows: AA, 50%; BB, 25%; CC, 25%. They further agreed that the beginning capital balances of the partners will reflect the same ratio. BB is to contribute P40,000 cash and a transportation equipment that has an original cost of P520,000, book value of P420,000, and a fair market value of P370,000. The transportation equipment is subject to a P242,000 mortgage that the partnership will assume. CC, on the other hand, will invest P66,000 cash and marketable securities costing P252,000 but currently worth P345,000. AA's investment in the partnership is the AA Company. The balance sheet of AA Company on the date of formation follows: Liabilities and Capital Accounts payable Notes payable AA, Capital Assets Cash 60,000 288,000 318,000 Accounts receivable - net 372,000 510,000 Inventory Office equipment 432,000 420,000 Total assets 1,200,000 Total liabilities and capital 1,200,000 The office equipment is net of accumulated depreciation of P120,000. The partners agreed that the inventory is worth P510,000, and the office equipment is worth half its original cost. The notes payable will not be assume by the partnership. Compute the partner's capital under Bonus method.
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Partners and Partnerships
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS