8. Anthony Taverna invited Jose Elchico and Ted Baylon to be his partners on June 1.2010to set up an advertising company. His business showed the following balances:DebitCreditCashP 20,000Accounts Receivable80,000Allowance for bad DebtsP 2,000120,00090,000Merchandise InventoryFurniture & EquipmentAllowance for DepreciationAccounts PayableTaverna, Capital18,00040,000250,000P310,000TotalsP310,000Taverna will invest only the non- cash assets as well as the liabilities of his sole-proprietor owned business for a 60% share in partners' equity, the other two partnerscontributing cash equally for the remaining interest. They agree to consider the followingadjustments for Taverna's contribution:1. The accounts receivable has a realizable value of P70,000.2. Merchandise inventory should be decreased by 10%.3. Furniture and equipment are only worth 75% of its cost.Direction: a) Compute for the adjusted capital of Taverna. Adjust and close his booksb) How much will be the cash investment of Jose and Ted?c) Give one investment entry to open the books of the partnership.9 Gilmore agron

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Description: 8. Anthony Taverna invited Jose Elchico and Ted Baylon to be his partners on June 1.2010to set up an advertising company. His business showed the following balances:DebitCreditCashP 20,000Accounts Receivable80,000Allowance for bad DebtsP 2,000120,00

a) Entries to adjust and close the books of Taverna: S no. Particulars Debit Credit 1)…

Business

Accounting

Anthony Taverna invited Jose Elchico and Ted Baylon to be his partners on Jun to set up an advertising company. His business showed the following balances: Debit Credit Cash P 20,000 80,000 Accounts Receivable Allowance for bad Debts P 2,000 Merchandise Inventory Furniture & Equipment Allowance for Depreciation 120,000 90,000 18,000 Accounts Pavable

Anthony Taverna invited Jose Elchico and Ted Baylon to be his partners on Jun to set up an advertising company. His business showed the following balances: Debit Credit Cash P 20,000 80,000 Accounts Receivable Allowance for bad Debts P 2,000 Merchandise Inventory Furniture & Equipment Allowance for Depreciation 120,000 90,000 18,000 Accounts Pavable

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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Concept explainers

Financial Transaction Analysis

The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business, at least two accounts should be affected I.e. both the debit side and the credit side should be equal. The Accounting Equation is

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Question

8. Anthony Taverna invited Jose Elchico and Ted Baylon to be his partners on June 1.2010
to set up an advertising company. His business showed the following balances:
Debit
Credit
Cash
P 20,000
Accounts Receivable
80,000
Allowance for bad Debts
P 2,000
120,000
90,000
Merchandise Inventory
Furniture & Equipment
Allowance for Depreciation
Accounts Payable
Taverna, Capital
18,000
40,000
250,000
P310,000
Totals
P310,000
Taverna will invest only the non- cash assets as well as the liabilities of his sole-
proprietor owned business for a 60% share in partners' equity, the other two partners
contributing cash equally for the remaining interest. They agree to consider the following
adjustments for Taverna's contribution:
1. The accounts receivable has a realizable value of P70,000.
2. Merchandise inventory should be decreased by 10%.
3. Furniture and equipment are only worth 75% of its cost.
Direction: a) Compute for the adjusted capital of Taverna. Adjust and close his books
b) How much will be the cash investment of Jose and Ted?
c) Give one investment entry to open the books of the partnership.
9 Gilmore agron

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