Formation and Operations of a Partnership On June 30, San Mateo and Caballes formed a partnership. The partners agreed to invest equal amounts of capital. San Mateo invested his proprietorship's assets and liabilities as follows: San Mateo's Fair Market Book Value Value Accounts Receivable P 72,000 P 72,000 Allowance for Uncollectible Accounts -0- 10,500 Merchandise Inventory Prepaid Expenses Office Equipment Accumulated Depreciation Accounts Payable 223,400 241,000 17,000 276,000 17,000 459,000 153,000 191,000 -0- 191,000 On June 30, Caballes invested cash in an amount equal to the current market value of San Mateo's partnership capital. San Mateo, the managing partner, would earn two- thirds of partnership profits. Caballes agreed to accept one-third of the profits. During the remainder of the year, the partnership earned P450,000. The temporary withdrawals of San Mateo and Caballes were P352,000 and P230,000, respectively. Required: 1. Journalize the partners' initial investments in a new set of books. 2. Prepare the partnership's statement of financial position immediately after its formation on June 30. 3. Journalize the entries to close the income summary and the drawing accounts.

Formation and Operations of a Partnership On June 30, San Mateo and Caballes formed a partnership. The partners agreed to invest equal amounts of capital. San Mateo invested his proprietorship's assets and liabilities as follows: San Mateo's Fair Market Book Value Value Accounts Receivable P 72,000 P 72,000 Allowance for Uncollectible Accounts -0- 10,500 Merchandise Inventory Prepaid Expenses Office Equipment Accumulated Depreciation Accounts Payable 223,400 241,000 17,000 276,000 17,000 459,000 153,000 191,000 -0- 191,000 On June 30, Caballes invested cash in an amount equal to the current market value of San Mateo's partnership capital. San Mateo, the managing partner, would earn two- thirds of partnership profits. Caballes agreed to accept one-third of the profits. During the remainder of the year, the partnership earned P450,000. The temporary withdrawals of San Mateo and Caballes were P352,000 and P230,000, respectively. Required: 1. Journalize the partners' initial investments in a new set of books. 2. Prepare the partnership's statement of financial position immediately after its formation on June 30. 3. Journalize the entries to close the income summary and the drawing accounts.

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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