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Exercise I On August 31, 20x1, Oliver, Olive and Olivia formed a partnership. Oliver is the industrial partner; Olive invested PI,000,000 cash and Olivia invested her assets and liabilities in the business as follows: Book Value Fair Market Value Cash P150,000 50,000 10,000 P150,000 Accounts Receivable Allowance for Bad Debts 50,000 Merchandise Inventory 220,000 210,000 15,000 Prepaid Expenses Furniture, Fixtures & Equip. (net) Accounts Payable 15,000 210,000 205,000 120,000 120,000 In the articles of partnership, the partners agreed to divide profits and losses in the following manner: Oliver Olive Olivia Salary per month Interest on capital investment Bonus based on profits after salary and interest Remaining profits or losses P10,000 10% p.a. 10% p.a. 35% 2/3 1/3 During August 31 to December 31, 20x1 the partnership earned P300,000. Required: 1. Prepare journal entries in the formation of the partnership. 2. Prepare the partnership's statement of financial position after the formation on August 31, 20x1. 3. Prepare the profit distribution schedule. nd exnensSe summary

Exercise I On August 31, 20x1, Oliver, Olive and Olivia formed a partnership. Oliver is the industrial partner; Olive invested PI,000,000 cash and Olivia invested her assets and liabilities in the business as follows: Book Value Fair Market Value Cash P150,000 50,000 10,000 P150,000 Accounts Receivable Allowance for Bad Debts 50,000 Merchandise Inventory 220,000 210,000 15,000 Prepaid Expenses Furniture, Fixtures & Equip. (net) Accounts Payable 15,000 210,000 205,000 120,000 120,000 In the articles of partnership, the partners agreed to divide profits and losses in the following manner: Oliver Olive Olivia Salary per month Interest on capital investment Bonus based on profits after salary and interest Remaining profits or losses P10,000 10% p.a. 10% p.a. 35% 2/3 1/3 During August 31 to December 31, 20x1 the partnership earned P300,000. Required: 1. Prepare journal entries in the formation of the partnership. 2. Prepare the partnership's statement of financial position after the formation on August 31, 20x1. 3. Prepare the profit distribution schedule. nd exnensSe summary

FINANCIAL ACCOUNTING
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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Program-Year-Section: Professor: Exercise I On August 31, 20x1, Oliver, Olive and Olivia formed a partnership. Oliver is the industrial partner; Olive invested PI,000,000 cash and Olivia invested her assets and liabilities in the business as follows: Book Value Fair Market Value Cash P150,000 50,000 P150,000 50,000 10,000 Accounts Receivable Allowance for Bad Debts Merchandise Inventory 220,000 210,000 Prepaid Expenses Furniture, Fixtures & Equip. (net) Accounts Payable 15,000 15,000 210,000 205,000 120,000 120,000 In the articles of partnership, the partners agreed to divide profits and losses in the following manner: Oliver Olive Olivia Salary per month Interest on capital investment Bonus based on profits after salary and interest Remaining profits or losses P10,000 10% p.a. 10% p.a. 35% 2/3 1/3 During August 31 to December 31, 20x1 the partnership earned P300,000. Required: 1. Prepare journal entries in the formation of the partnership. 2. Prepare the partnership's statement of financial position after the formation on August 31, 20x1. 3. Prepare the profit distribution schedule. 4. Prepare journal entries to close the income and expense summary account to partners' capital.
Transcribed Image Text:Program-Year-Section: Professor: Exercise I On August 31, 20x1, Oliver, Olive and Olivia formed a partnership. Oliver is the industrial partner; Olive invested PI,000,000 cash and Olivia invested her assets and liabilities in the business as follows: Book Value Fair Market Value Cash P150,000 50,000 P150,000 50,000 10,000 Accounts Receivable Allowance for Bad Debts Merchandise Inventory 220,000 210,000 Prepaid Expenses Furniture, Fixtures & Equip. (net) Accounts Payable 15,000 15,000 210,000 205,000 120,000 120,000 In the articles of partnership, the partners agreed to divide profits and losses in the following manner: Oliver Olive Olivia Salary per month Interest on capital investment Bonus based on profits after salary and interest Remaining profits or losses P10,000 10% p.a. 10% p.a. 35% 2/3 1/3 During August 31 to December 31, 20x1 the partnership earned P300,000. Required: 1. Prepare journal entries in the formation of the partnership. 2. Prepare the partnership's statement of financial position after the formation on August 31, 20x1. 3. Prepare the profit distribution schedule. 4. Prepare journal entries to close the income and expense summary account to partners' capital.
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