Kalaw and Woo are partners sharing profits and losses in the ratio of 1:2 respectively. On July 1, 2013, theydecided to form KW Corporation by transferring the assets and liabilities from the partnership to thecorporation in exchange for its shares of stock. The following is the post closing trial balance of thepartnership:DebitCreditCashP 45,000Accounts Receivable (net)60,00090,000InventoryProperty & Equipment (net) 174,000P 60,00094,800214,200LiabilitiesKalaw, CapitalWoo, CapitalTotalP369,000P369,000It was agreed that adjustments be made to the following assets to be transferred to the corporation:Accounts ReceivablesP 40,00068,000InventoryProperty and Equipment180,600KW Corporation was authorized to issue P100 par preference share and P10 par ordinary share. Kalaw andWoo agreed to receive for their equity in the partnership 720 shares of the ordinary shares stock each, pluseven multiples of 10 shares of preference shares for the remaining interest.REQUIRED:1. Compute for the total number of preference and ordinary shares to be issued by the corporation inexchange for the assets and liabilities of the partnership.2. Prepare one journal entry to record the issuance of the shares computed in Number 1, assumingnew set of books was opened for the corporation.

Hey there since you have posted multiple questions, we can answer only first question please…

Answered: Compute for the total number of…

Compute for the total number of preference and ordinary shares to be issued by the corporation in exchange for the assets and liabilities of the partnership.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: How does partnership accounting differ from corporate accounting? A. The matching principle is…

A: The company is a separate identity different from its promoters that is why it has separate…

Q: Explain common forms of business ownership—soleproprietorship, partnership, and corporation—and…

A: A form of business that is owned and controlled by an individual and does not have a separate legal…

Q: How does a proportionate current distribution of cash from a partnership to a partner compare with…

A: SOLUTION- A cash dividend is the distribution of funds or money paid to stockholders generally as…

Q: How isaccounting for a partnership ifferent from accounting for a corporation

A: Accounting processes for a partnership business and accounting processes for a corporation have…

Q: Paid-in-capital What types of paid-in-capital are there and what is the diffference in each…

A: Capital:Capital is the amount invested in the business. Capital increases by the amount of profits…

Q: How a corporation is different from a partnership in terms of owner, legal status, liabilities,…

A: The distinction between a corporation and a partnership in terms of owner, legal status, liability,…

Q: What are the major features of a partnership agreement for a partnership or an operating agreement…

A: Partnership It is that form of organization which is owned and managed by two or more persons who…

Q: Determine whether each describes a sole proprietorship, a general partnership, or a corporation.…

A: The answers are provided below:

Q: Which business entity could O A. a sole proprietorship O B. a partnership O C. a limited liability…

A: When a group of people with a shared objective form a corporation, it is known as a corporation.…

Concept explainers

Partnership Accounting

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

Partner Admission and Withdrawal

A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is 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, drawings of a partner, etc.

Question

Kalaw and Woo are partners sharing profits and losses in the ratio of 1:2 respectively. On July 1, 2013, they
decided to form KW Corporation by transferring the assets and liabilities from the partnership to the
corporation in exchange for its shares of stock. The following is the post closing trial balance of the
partnership:
Debit
Credit
Cash
P 45,000
Accounts Receivable (net)
60,000
90,000
Inventory
Property & Equipment (net) 174,000
P 60,000
94,800
214,200
Liabilities
Kalaw, Capital
Woo, Capital
Total
P369,000
P369,000
It was agreed that adjustments be made to the following assets to be transferred to the corporation:
Accounts Receivables
P 40,000
68,000
Inventory
Property and Equipment
180,600
KW Corporation was authorized to issue P100 par preference share and P10 par ordinary share. Kalaw and
Woo agreed to receive for their equity in the partnership 720 shares of the ordinary shares stock each, plus
even multiples of 10 shares of preference shares for the remaining interest.
REQUIRED:
1. Compute for the total number of preference and ordinary shares to be issued by the corporation in
exchange for the assets and liabilities of the partnership.
2. Prepare one journal entry to record the issuance of the shares computed in Number 1, assuming
new set of books was opened for the corporation.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

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.

Similar questions

What are the unique financial reporting implications of the Partnership entity in comparison with the Proprietorship and Corporate structures? How does the closing process differ for the Partnership?
What information do the capital accounts found in partnership accounting convey?
How do you distinguish a partnership from a corporation? How do you distinguish a public partnership from a public corporation? If you were starting a business with a friend and only had a choice between a partnership and corporation, which would you choose and why?
how do owners’ equity accounts in a corporation differ from those in a sole proprietorship or partnership
Distinguish the difference between Limited Liability Corporation vs Limited Liability Partnership.
Which of the following is a correct definition of a concept related to partnership taxation? A partner's capital-sharing ratio is defined as the percentage of partnership assets (capital) that would be allocated to the partner upon liquidation of the partnership. A special allocation is defined as an amount that could differently affect the tax liabilities of two or more partners. The partnership's outside basis is defined as the sum of each partner's capital account balance. The aggregate concept treats partners and partnerships as separate units and gives the partnership its own tax personality.