On June 30, 20x10 MOC, the sole proprietor of MOC Inc, expands the company and establishes a partnership with CBC and GKR. The partners plan to share profits and losses as follows: MOC, 50%; CBC, 25% and GKR 25%. They also agree that the beginning capital balances of partnership will reflect this same relationship. MOC asked CBC to join the partnership because his many business contacts are expected to be valuable during the expansion. CBC is also contributing P40,000 and a building that has an original cost of P520,000, book value of P420,000, tax assessment of P310,000 and fair value of P370,000. The building is subject to a P242,000 mortgage that the partnership will assume. GKR is contributing P66,000 and marketable securities costing P252,000 but are currently worth P345,000.MOC’s investment in the partnership is his business. He plans to pay off the notes with his personal assets. The other partners have agreed that the partnership will assume the accounts payable. The balance sheet for the MOC Inc follows:
On June 30, 20x10 MOC, the sole proprietor of MOC Inc, expands the company and establishes a
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