Moira admits Joni as a partner in the business. Balance sheet accounts of Moira just before the admission of July shows: Cash, P43,000, Accounts Receivable, P150,000, Merchandise Inventory, P170,000, and Accounts Payable, P52,000. It was agreed that for purposes of establishing Moira’s interest, the following adjustments should be made: 1.) an allowance for doubtful accounts of 3% of accounts receivable is to be established; 2.) merchandise inventory is to be increased by P25,000; and 3.) prepaid expenses of P7,600 and accrued liabilities of P4,800 are to be recognized. QUESTION: If Joni is to invest sufficient cash to obtain 2/5 interest in the partnership, what amount should she contribute to the new business? (Good Accounting Form)
PROBLEM:
Moira admits Joni as a partner in the business.
It was agreed that for purposes of establishing Moira’s interest, the following adjustments should be made:
1.) an allowance for doubtful accounts of 3% of accounts receivable is to be established;
2.) merchandise inventory is to be increased by P25,000; and
3.) prepaid expenses of P7,600 and accrued liabilities of P4,800 are to be recognized.
QUESTION:
If Joni is to invest sufficient cash to obtain 2/5 interest in the partnership, what amount should she contribute to the new business? (Good Accounting Form)
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