A has an existing business and admits B as a partner in the business.Statement of Financial Position accounts of A just before the admission of B show:Cash, P26,000, Accounts receivable, P 120,000, Merchandise inventory, P180,000, andAccounts payable, P62,000.It was agreed that for purposes of establishing A's interest, the following adjustmentsbe made:1. an Allowance for Doubtful Accounts of 3% of accounts receivable is to be set up;2. Merchandise inventory is to be adjusted upward by P25,000; and3. Prepaid Expenses of P3,600 and Accrued Liabilities of P4,000 are to be recognized.If B is to invest sufficient cash to obtain 3/5 interest in the partnership, Compute theamount B contributes to the new partnership.

Partnership firm is where two or more person come together to form a business. And they should share…

Answered: If B is to invest sufficient cash to…

If B is to invest sufficient cash to obtain 3/5 interest in the partnership, Compute the amount B contributes to the new partnership.

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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Question

A has an existing business and admits B as a partner in the business.
Statement of Financial Position accounts of A just before the admission of B show:
Cash, P26,000, Accounts receivable, P 120,000, Merchandise inventory, P180,000, and
Accounts payable, P62,000.
It was agreed that for purposes of establishing A's interest, the following adjustments
be made:
1. an Allowance for Doubtful Accounts of 3% of accounts receivable is to be set up;
2. Merchandise inventory is to be adjusted upward by P25,000; and
3. Prepaid Expenses of P3,600 and Accrued Liabilities of P4,000 are to be recognized.
If B is to invest sufficient cash to obtain 3/5 interest in the partnership, Compute the
amount B contributes to the new partnership.

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