On December 31, 2018, the unadjusted Statement of Financial Position of LAV Partnership shows the following data with profit and loss sharing agreement of 2:3:5. Total Assets 100,000 Total Liabilities 40,000 Lorna 10,000 Amy 20,000 Veronica. 30,000 On December 31, 2018, Lorna decided to retire from the partnership. However, before the distribution of cash to Lorna, the following data errors were discovered during the pre-retirement audit: • During the year, machinery was over depreciated by P15,000. • The net income for the year is overstated by P5,000. After the adjustment, Lorna received P15,000 for her capital interest. What is the capital of Amy after Lorna’s retirement? A. 27,500 B. 23,000 C. 21,875 D. 20,000
On December 31, 2018, the unadjusted Statement of Financial Position of LAV Partnership shows the following data with profit and loss sharing agreement of 2:3:5. Total Assets 100,000 Total Liabilities 40,000 Lorna 10,000 Amy 20,000 Veronica. 30,000 On December 31, 2018, Lorna decided to retire from the partnership. However, before the distribution of cash to Lorna, the following data errors were discovered during the pre-retirement audit: • During the year, machinery was over depreciated by P15,000. • The net income for the year is overstated by P5,000. After the adjustment, Lorna received P15,000 for her capital interest. What is the capital of Amy after Lorna’s retirement? A. 27,500 B. 23,000 C. 21,875 D. 20,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On December 31, 2018, the unadjusted Statement of Financial Position of LAV Partnership shows the following data with profit and loss sharing agreement of 2:3:5.
Total Assets 100,000
Total Liabilities 40,000
Lorna 10,000
Amy 20,000
Veronica. 30,000
On December 31, 2018, Lorna decided to retire from the partnership. However, before the distribution of cash to Lorna, the following data errors were discovered during the pre-retirement audit:
• During the year, machinery was over depreciated by P15,000.
• The net income for the year is overstated by P5,000. After the adjustment, Lorna received P15,000 for her capital interest.
What is the capital of Amy after Lorna’s retirement?
A. 27,500
B. 23,000
C. 21,875
D. 20,000
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