Lourdes and Annie are combining separate businesses to form a partnership. Cash and noncash assets are to be contributed for a total capital of P300,000. The noncash assets to be distributed and the liabilities to be assumed are: Lourdes Annie Book Value Fair Value Book Value Fair Value Accounts Receivable P20,000 P20,000 Inventories 30,000 40,000 P20,000 P25,000 Equipment 60,000 45,000 40,000 50,000 Accounts Payable 15,000 15,000 10,000 10,000 The partner's capital accounts should be equal after all contributions of assets and the assumption of liabilities. Required: A. Prepare journal entries to record the investments of Lourdes and Annie in the books of the partnership. B. Prepare the statement of financial position of the partnership on July 18, 2018, the date of the formation.
Lourdes and Annie are combining separate businesses to form a partnership. Cash and noncash assets are to be contributed for a total capital of P300,000. The noncash assets to be distributed and the liabilities to be assumed are: Lourdes Annie Book Value Fair Value Book Value Fair Value Accounts Receivable P20,000 P20,000 Inventories 30,000 40,000 P20,000 P25,000 Equipment 60,000 45,000 40,000 50,000 Accounts Payable 15,000 15,000 10,000 10,000 The partner's capital accounts should be equal after all contributions of assets and the assumption of liabilities. Required: A. Prepare journal entries to record the investments of Lourdes and Annie in the books of the partnership. B. Prepare the statement of financial position of the partnership on July 18, 2018, the date of the formation.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Lourdes and Annie are combining separate businesses to
form a partnership. Cash and noncash assets are to be
contributed for a total capital of P300,000. The noncash
assets to be distributed and the liabilities to be assumed
are:
Lourdes
Annie
Book Value Fair Value Book Value Fair Value
Accounts Receivable P20,000 P20,000
Inventories
30,000
40,000 P20,000 P25,000
Equipment
60,000
45,000
40,000
50,000
Accounts Payable
15,000
15,000 10,000
10,000
The partner's capital accounts should be equal after all
contributions of assets and the assumption of liabilities.
Required:
A. Prepare journal entries to record the investments of
Lourdes and Annie in the books of the partnership.
B. Prepare the statement of financial position of the
partnership on July 18, 2018, the date of the
formation.
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