Coco and Martin agreed to form a partnership which shall be engaged in the buy and sell of RTW apparels. The following items are being invested to form CM Partnership: AGREED VALUATION COCO MARTIN Cash P100,000 P100,000 Merchandise Inventory 100,000 Land 200,000 Building 400,000 Equipment 200,000 Subtotals P400,000 P700,000 Mortgage on building assumed by the partnership (200,000) Totals P400,000 P500,000 Instruction: Prepare journal entries to record the formation of CM Partnership: A. Assuming that Coco and Martin agree that each partner is to receive a capital credit equal to the agreed valuation of the net assets each partner invested. B. Assuming that Coco and Martin agree that each partner is to receive an equal capital interest - goodwill approach. C. Assuming that Coco and Martin agree that each partner is to receive an equal capital interest - bonus approach.
Coco and Martin agreed to form a partnership which shall be engaged in the buy and sell of RTW apparels. The following items are being invested to form CM Partnership: AGREED VALUATION COCO MARTIN Cash P100,000 P100,000 Merchandise Inventory 100,000 Land 200,000 Building 400,000 Equipment 200,000 Subtotals P400,000 P700,000 Mortgage on building assumed by the partnership (200,000) Totals P400,000 P500,000 Instruction: Prepare journal entries to record the formation of CM Partnership: A. Assuming that Coco and Martin agree that each partner is to receive a capital credit equal to the agreed valuation of the net assets each partner invested. B. Assuming that Coco and Martin agree that each partner is to receive an equal capital interest - goodwill approach. C. Assuming that Coco and Martin agree that each partner is to receive an equal capital interest - bonus approach.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Coco and Martin agreed to form a partnership which shall be engaged in the buy and sell of RTW apparels. The following items are being invested to form CM Partnership:
| AGREED | VALUATION | |
| COCO | MARTIN | |
| Cash | P100,000 | P100,000 |
| Merchandise Inventory | 100,000 | |
| Land | 200,000 | |
| Building | 400,000 | |
| Equipment | 200,000 | |
| Subtotals | P400,000 | P700,000 |
| Mortgage on building assumed by the partnership | (200,000) | |
| Totals | P400,000 | P500,000 |
Instruction: Prepare
A. Assuming that Coco and Martin agree that each partner is to receive a capital credit equal to the agreed valuation of the net assets each partner invested.
B. Assuming that Coco and Martin agree that each partner is to receive an equal capital interest -
C. Assuming that Coco and Martin agree that each partner is to receive an equal capital interest - bonus approach.
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