EXERCISES Ben and Bob are partners in a business selling sports wear and equipment which theey organized in 2015. Profits are shared in the ratio of 1:1, respectively. Their capital balances as of December 31, 2017 were P240,000 and P260,000, respectively. Drawing accounts are always closed yearly to the capital accounts. They agreed to admit Ted upon payment of P150,000 for a 50% interest from Bench on July 1, 2018. Before admission they agreed to update tir capital accounts for the following: a) net income of P250,000 for the first half of 2018 b) monthly salary drawings of P10,000 and P20,000 were made by Ben and Bob. c) revalue equipments acquired at a cost of P200,000, book value of P180,000 and a fair market value equal to 75% of its book value. Direction: Prepare a table revising partners' equity for revaluation and equity transfer. a. Record profit share, asset revaluation and close to capital the drawings they made. b. Based on the updated capital accounts of the existing partners record the admission of Ted. c. Prepare the revised partners' equity just after admission. d. Determine the revised profit and loss ratio of the partners, assuming there was agreement made after the purchase was made. aces in the ratio of 2-2-1
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
1. Ben and Bob are partners in a business selling sports wear and equipment which they organized in 2015. Profits are shared in the ratio of 1:1, respectively, Their capital balances as of December 31, 2017 were P240,000 and P260,000, respectively. Drawing accounts are always closed yearly to the capital accounts. They agreed to admit Ted upon payment of P150,000 for a 50% interest from Bench on July 1, 2018. Before admission they agreed to update their capital accounts for the following:
(see attached image for the given. please answer it based on your knowledge. thank you so much)
NOTE: someone already answer letter a to c so please answer letter d. thank you once again!
Direction: Prepare a table revising partners' equity for revalualion and equity transfer.
d. Determine the revised
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