Answered: Calaguas and Dela Cruz formed a…

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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Question

Calaguas and Dela Cruz formed a partnership and invested the following assets and liabilities:

Calaguas: Fair Market Value (FMV) Carrying Value

Cash P300,000 P300,000

Land 450,000 280,000

Dela Cruz:

Cash 100,000 100,000

Building 600,000 520,000

Mortgage Payable (400,000) (400,000)

Required: Prepare the opening entry in the books of the partnership.

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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