Problem 1 PROBLEM IOn July 25, 2018 Sarah and Matteo decided to form a partnership. Below is the Statement of Financial Position of Sarah on June 30,2018:AssetsCash800,000Accounts Receivable2,400,000Merchandise Inventory4,000,000Equipment7,200,000Total14.400.000Liability and EquityAccounts Payable3,000,000Notes Payable5,000,000Sarah, Capital6,400,000Total14.400.000They agreed on the following at the date of formation:> The Accounts Receivable is 88% collectible.> The current fair value of the Merchandise Inventory is 4,800,000.> Equipment is overvalued by 600,000.> Prepaid expenses of 275,000 and accrued expenses of 125,000 are to be recognized.> Matteo will invest sufficient cash for a 25% interest in the partnership.1. How much is the adjusted capital of Sarah on July 25, 2018?2. How much cash will Matteo invest?3. What is the total amount of cash at the date of formation?4. What is total amount if assets at the date of formation?5. What is the total amount of liabilities at the date of formation?

Sarah Balance sheet as on 30/06/2018 Liabilities Assets Sarah Capital 6400000 Cash 800000…

How much is the Justed capital saran on Jul 20167 2. How much cash will Matteo invest? 3. What is the total amount of cash at the date of formation? 4. What is total amount if assets at the date of formation? 5. What is the total amount of liabilities at the date of formation?

How much is the Justed capital saran on Jul 20167 2. How much cash will Matteo invest? 3. What is the total amount of cash at the date of formation? 4. What is total amount if assets at the date of formation? 5. What is the total amount of liabilities at the date of formation?

Century 21 Accounting General Journal

11th Edition

ISBN:9781337680059

Author:Gilbertson

Publisher:Gilbertson

Chapter23: Accounting For Partnerships

Section23.2: Distribution Of Net Income And Owners’ Equity Statements

Problem 1WT

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