Answered: Froilan Labausa contributed land,…

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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Problem #1. Partner'Original Investment

Froilan Labausa contributed land, inventory, and P280,000 cash to partnership.The land has a book value of P650,000 and a market value P1,350,000.The inventory has a book value of P600,000 and a market value of P510,000.The partnership also assumed a P350,000 a note payable owed by Labausa that was used to purchase the land.Rosalie Balhag to put up cash equivalent to Labausa's net investment.

Required:

Prepare a journal entry to report Labausa's and Balhag's investment in the partnership.

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement 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, and drawings of a partner.

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