. On July 1 of the current year, Abella and Balansay formed a partnershipAbella is to invest certain business assets at values which are yet to beagreed upon. He is to transfer his business liabilities and to contributesufficient cash to bring his total capital to P495,000, which is 60% of thetotal capital s had been agreed upon.Details regarding the book values of Abella's business assets and liabilitiesand their corresponding valuation follow:Book values Agreed valuationsP148,50016,500288,750P148,5009,900Accounts receivableAllowance for doubtful accountsMerchandise inventoryStore equipmentAD- Store equipment265,65074,25049,50036,300Office equipmentAD-Office equipmentAccounts payable49,50026,400132,00013,200132,000Balansay agrees to invest cash of P82,500 and merchandise valued atcurrent market price. The value of the merchandise to be invested byBalansay and the amount of cash to be invested by Abella are?a. P330,000 and P132,000 respectively.b. P577,500 and P135,300 respectively.P288,750 and P137,500 respectively.d. P247,500 and P132,000 respectively.C.

1)Calculation of Total Capital in partnership Firm: Abella Share in firm = P495,000 / 60% *100% =…

Answered: On July 1 of the current year, Abella…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Kimble, Sykes, and Gerard open an accounting practice on January 1, 2022, in Chicago, Illinois, to be operated as a partnership. Kimble and Sykes will serve as the senior partners because of their years of experience. To establish the business, Kimble, Sykes, and Gerard contribute cash and other properties valued at $233,000, $192,500, and $104,500, respectively. An articles of partnership agreement is drawn up stipulating the following: • • Personal drawings are allowed annually up to an amount equal to 10 percent of the partner's beginning capital balance for the year. Profits and losses are allocated according to the following plan: 1. Each partner receives an annual salary allowance of $55 per billable hours worked. 2. Interest is credited to the partners' capital accounts at the rate of 12 percent of the beginning capital balance for the year. 3. Kimble and Sykes are eligible for an annual bonus of 10 percent of net income after subtracting the bonus, salary allowance, and…
Kimble, Sykes, and Gerard open an accounting practice on January 1, 2022, in Chicago, Illinois, to be operated as a partnership. Kimble and Sykes will serve as the senior partners because of their years of experience. To establish the business, Kimble, Sykes, and Gerard contribute cash and other properties valued at $248,000, $200,000, and $112,000, respectively. An articles of partnership agreement is drawn up stipulating the following: Personal drawings are allowed annually up to an amount equal to 10 percent of the partner's beginning capital balance for the year. Profits and losses are allocated according to the following plan: Each partner receives an annual salary allowance of $55 per billable hours worked. Interest is credited to the partners’ capital accounts at the rate of 12 percent of the beginning capital balance for the year. Kimble and Sykes are eligible for an annual bonus of 10 percent of net income after subtracting the bonus, salary allowance, and interest. The…
Farmer and Taylor formed a partnership with capital contributions of $245,000 and $295,000, respectively. Their partnership agreement calls for Farmer to receive a $79,000 per year salary allowance. The remaining income or loss is to be divided equally. Assuming net income for the current year is $189,000, the journal entry to allocate net income is: dit Fo Debit Income Summary, $189,000; Credit Farmer, Capital, $94,500; Credit Taylor, Capital, $94,500. Debit Income Summary, $189,000; Credit Farmer, Capital, $166,000; Credit Taylor, Capital, $23,000. Debit Income Summary, $189,000; Credit Farmer, Capital, $48,840; Credit Taylor, Capital, $140,160. Debit Income Summary, $189,000; Credit Farmer, Capital, $134,000; Credit Taylor, Capital, $55,000. Debit Income Summary, $189,000; Credit Taylor, Capital, $134,000; Credit Farmer, Capital, $55,000.
How much is the capital of Adee upon partnership formation?
On April 30, 2021, AAA admits BBB for an interest in his business. On this date, AAA's capital account shows a balance of P 158,400. The following were agreed upon before the formation of the partnership: Prepaid expenses of P17,500 and accrued expenses of P5,000 are to be recognized. 5% of the outstanding accounts receivable of AAA amounting to P100,000 is to be recognized as uncollectible. BBB is to be credited with a one-third interest in the partnership and is to invest cash. Determine the amount of cash to be invested by BBB:
The condensed statement of financial position of the partnership of Buenaflor and Gangoso as of December 31, 2020 showed the following: Total assets P 200, 000Total liabilities 40, 000Buenaflor, Capital 80, 000Gangoso, Capital 80, 000 On this date, the partnership was dissolved and its net assets transferred to a newly formed corporation.The fair value of the assets was P 24, 000 more than the carrying value on the firm’s books. REQUIRED: Prepare the journal entries in the books of the corporation with P 1 par ordinary share.
After the tangible assets have been adjusted to current market prices, the capital accounts of Grayson Jackson and Harry Barge have balances of $64,900 and $86,500, respectively. Lewan Gorman is to be admitted to the partnership, contributing $43,300 cash to the partnership, for which he is to receive an ownership equity of $50,500. All partners share equally in income. a. Journalize the entry to record the admission of Gorman, who is to receive a bonus of $7,200. If an amount box does not require an entry, leave it blank. Cash Grayson Jackson, Capital Harry Barge, Capital Lewan Gorman, Capital b. What are the capital balances of each partner after the admission of the new partner? Partner Balance Grayson Jackson $ Harry Barge $ Lewan Gorman $
On April 01, 2022, Chito and Ernie pooled their resources to form a partnership, with the firm taking over their business assets and assuming their business liabilities. On this date, their individual trial balances show the following: Chito Ernie P25,000 150,000 Cash P30,000 220,000 Non cash assets Accounts payable Notes payable Capital 60,000 45,000 100,000 105.000 115.000 The partners agreed that capital ratio must be 40:60 and that additional cash investment is to be made to raise the total capital to P350,000: • Non cash assets should be adjusted to their market values of: Chito, P120,000 and Ernie, P190,000. • Unrecorded liabilities in the books of Chito amounting to P5,000 while acerued interest on notes payable of Emie in the amount of P5,000 is to be recognized Prepaid rent in the books of Ernie amounting to P6,000 is to be recorded. Determine the amount of additional cash invested by Chito to conform with the agreement:
Manji

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS