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From the problem below, determine the ending capital of ACHE at December 31, 2020. ON June 1, 2020, HEAD and ACHE decided to form a partnership contributing their existing businesses. The following is taken form their trial balance: HEAD ACHE Cash 250,000 150,000 Receivables (net) Inventory 100,000 80,000 125,000 150,000 Fixed Assets (net) Liabilities 500,000 400,000 250,000 250,000 The partners agreed on the following: 1. P50,000 of HEAD'S cash represents converted foreign currencies amounting to FC1,000 on December 31, 2019. The current spot rate of FC1 is equivalent to

From the problem below, determine the ending capital of ACHE at December 31, 2020. ON June 1, 2020, HEAD and ACHE decided to form a partnership contributing their existing businesses. The following is taken form their trial balance: HEAD ACHE Cash 250,000 150,000 Receivables (net) Inventory 100,000 80,000 125,000 150,000 Fixed Assets (net) Liabilities 500,000 400,000 250,000 250,000 The partners agreed on the following: 1. P50,000 of HEAD'S cash represents converted foreign currencies amounting to FC1,000 on December 31, 2019. The current spot rate of FC1 is equivalent to

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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From the problem below, determine the ending capital of ACHE at December 31, 2020. ON June 1, 2020, HEAD and ACHE decided to form a partnership contributing their existing businesses. The following is taken form their trial balance: ACHE Cash HEAD 250,000 100,000 150,000 80,000 Receivables (net) Inventory 125,000 150,000 500,000 400,000 Fixed Assets (net) Liabilities 250,000 250,000 The partners agreed on the following: 1. P50,000 of HEAD'S cash represents converted foreign currencies amounting to FC1,000 on December 31, 2019. The current spot rate of FC1 is equivalent to P53. 2. The receivables of HEAD and ACHE currently have a net realizable value of 80% it is agreed that their net realizable value must be adjusted to 75%. HEAD's inventory has a NRV of P140,000 and could be currently sold for P200,000. 3. life. It's estimated HEAD's machine was purchased last year with a 5-year current value is 90% of its cost. 5. ACHE's fixed asset has an 80% condition percentage. If bought brand new, it's price would be P550,000. 6. The partners are to share in profits and losses in the ratio of 6:4 and their capital in the partnership is to reflect this ratio. 7. The partners further agreed to divide profits and losses in the following manner: A. Annual salaries of P120,000 and P150,000 is to be given to HEAD and ACHE, which is to be taken out evenly during the year by each partner. B. 10% interest on beginning capital is to be given to each partner. C. 20% bonus after interest is to be given to ACHE. For 2020, the partnership reported net income of P350,000 treating the salaries as a partnership expense. 4.
Transcribed Image Text:From the problem below, determine the ending capital of ACHE at December 31, 2020. ON June 1, 2020, HEAD and ACHE decided to form a partnership contributing their existing businesses. The following is taken form their trial balance: ACHE Cash HEAD 250,000 100,000 150,000 80,000 Receivables (net) Inventory 125,000 150,000 500,000 400,000 Fixed Assets (net) Liabilities 250,000 250,000 The partners agreed on the following: 1. P50,000 of HEAD'S cash represents converted foreign currencies amounting to FC1,000 on December 31, 2019. The current spot rate of FC1 is equivalent to P53. 2. The receivables of HEAD and ACHE currently have a net realizable value of 80% it is agreed that their net realizable value must be adjusted to 75%. HEAD's inventory has a NRV of P140,000 and could be currently sold for P200,000. 3. life. It's estimated HEAD's machine was purchased last year with a 5-year current value is 90% of its cost. 5. ACHE's fixed asset has an 80% condition percentage. If bought brand new, it's price would be P550,000. 6. The partners are to share in profits and losses in the ratio of 6:4 and their capital in the partnership is to reflect this ratio. 7. The partners further agreed to divide profits and losses in the following manner: A. Annual salaries of P120,000 and P150,000 is to be given to HEAD and ACHE, which is to be taken out evenly during the year by each partner. B. 10% interest on beginning capital is to be given to each partner. C. 20% bonus after interest is to be given to ACHE. For 2020, the partnership reported net income of P350,000 treating the salaries as a partnership expense. 4.
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