7. Determine the capital to be credited to Austin.Celestine and Jewel are partners who share income in the ratio of 2:3. The partners agree to admitAustin as a partner upon investing P150,000 cash for a 1/5 interest in the firm. The assets of the firmare fairly valued except for a building that is overvalued by P150,000. The capital accounts of Celestineand Jewel show balances of P450,000 and P300,000.

Austin is a new partner who got admitted for 1/5 share by investing…

Answered: 7. Determine the capital to be credited…

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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Charlie and Delta formed a partnership. Charlie invested cash worth P85,000 and a machine. On the other hand, Delta contributed cash worth P55,000 and an equipment which has a mortgage of P35.000 which Delta will pay personally The total capital after formation was P350,000. They also further agreed to reflect 55:45 ratio as to their capital balances respectively. No other investment or withdrawal occurred other than mentioned to reflect their capital ratio agreement. How much is the fair value of the machine?
On January 1, FRED and GEMMO formed a partnership by contributing cash of P300,000 and P360,000 , respectively . On August 1, Fred contributed an additional cash of P45,000 . On June 1 , Gemmo contributed machinery with a fair market value of P60,000 and a net book value of P90,000 when contributed . On July 1, Fred and Gemmo each withdrew 30,000 . 1. What is the average capital of Fred ? 2. What is the average capital of Gemmo?
How much cash must be contributed by each of the partners after they contributed their properties
Watts and Lyon are forming a partnership. Watts invests $24,500 and Lyon invests $45,500. The partners agree that Watts will work one-fourth of the total time devoted to the partnership and Lyon will work three-fourths. They have discussed the following alternative plans for sharing income and loss: (a) in the ratio of their initial capital investments; (b) in proportion to the time devoted to the business; (c) a salary allowance of $18,000 per year to Lyon and the remaining balance in accordance with the ratio of their initial capital investments; or (d) a salary allowance of $18,000 per year to Lyon, 9% interest on their initial capital investments, and the remaining balance shared equally. The partners expect the business to perform as follows: Year 1, $17,000 net loss; Year 2, $42,500 net income; and Year 3, $70,833 net income. Required: Complete the tables, one for each of the first three years, by showing how to allocate partnership income or loss to the partners under each of…
Watts and Lyon are forming a partnership. Watts invests $40,500 and Lyon invests $49,500. The partners agree that Watts will work one-fourth of the total time devoted to the partnership and Lyon will work three-fourths. They have discussed the following alternative plans for sharing income and loss: (a) in the ratio of their initial capital investments; (b) in proportion to the time devoted to the business; (c) a salary allowance of $15,000 per year to Lyon and the remaining balance in accordance with the ratio of their initial capital investments; or (d) a salary allowance of $15,000 per year to Lyon, 11% interest on their initial capital investments, and the remaining balance shared equally. The partners expect the business to perform as follows: Year 1, $13,000 net loss; Year 2, $32,500 net income; and Year 3, $54,167 net income. Required: Complete the tables, one for each of the first three years, by showing how to allocate partnership income or loss to the partners under each of…
Gerald and Julia are joining their separate business to form a partnership and they agreed to share profits in the manner of 55% for Gerald and 45% for Julia. Property is to be contributed for a total capital of P800,000. The partners agreed to make their capital accounts equal after formation. How much cash must be contributed by each of the partners after they contributed their properties? Gerald Julia Book Value Fair Value Book Value Fair Value Accounts Receivable 60,000 60,000 - - Inventories 60,000 90,000 160,000 180,000 Equipment 100,000 80,000 180,000 190,000 Accounts Payable 30,000 30,000 20,000 20,000
Please explain it properly
Jeremy and Eli are partners who share profits and losses equally. The capital accounts of the partners have the following balances: Jeremy 180,000 Eli 70,000 Thadez desires to join the firm and offered to invest 96,000 for a 1/3 interest. Jeremy and Eli declined his offer, but they extended a counter-offer to Thadez of 88,000 for a 25% interest in the capital and profits and losses of the firm. If Thadez accepted the offer, what would be the balance of Jeremy’s capital account after Thadez’s admission? Group of answer choices 178,250 187,000 199,000 181,750
Karasuma and Irina are partners who have capitals of P6,000 and P4,800 and who share profits in the ratio of 3:2. Koro is admitted as a partner upon investing cash of P5,000, with profits to be shared equally. Assume that Koro is allowed a 40% interest in the firm. 1. What entries would be made in recording the investment if the asset revaluation method is used? 2. What entries would be made if the bonus method is used? 3. Which method will be preferred by Koro? How much will Koro gain by the use of this method?

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