How much are the capital credit and the adjusted capital balances of A and B upon formation?
On January 1, 2021, A and B, both sole proprietors, decided to form a partnership to expand both of their businesses. According to their agreement, they will split
The following are A and B’s Statements of Financial Position (Attached in the photo):
The values reflected in the
- A's
- Both Inventories of A and B are now 90,000 and 70,000 respectively.
- Equipment for B has an assessed value of 275,000, appraised value of 250,000 and book value of 200,000.
- Additional accrued expenses are to be established in the amount of 10,000 for B only while additional accounts payable in the amount of 5,000 for A
- It is also agreed that all liabilities will be assumed by the partnership, except for the notes payable of B which will be personally paid by him.
Answer the question based on the above:
How much are the capital credit and the adjusted capital balances of A and B upon formation?
Step by step
Solved in 4 steps with 10 images
