On June 30, Chub invested cash in an amount equal to the current market value of Max's partnership capital. Max, the managing partner, would earn two- thirds of partnership profits. Chub agreed to accept one-third of the profits. During the remainder of the year, the partnership earned P450,000. The temporary withdrawals of Max and Chub were P352,000 and P230,000, respectively.
On June 30, Chub invested cash in an amount equal to the current market value of Max's partnership capital. Max, the managing partner, would earn two- thirds of partnership profits. Chub agreed to accept one-third of the profits. During the remainder of the year, the partnership earned P450,000. The temporary withdrawals of Max and Chub were P352,000 and P230,000, respectively.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
About accounting formation. Please provide solution/explanation. Thank you!
Transcribed Image Text:On June 30, Max and Chub formed a partnership called "Magnus Opus Partnership". The partners
agreed to invest equal amounts of capital. Max invested his proprietorship's assets and liabilities as
follows:
Max's Book
Book Value
Fair Market Value
Accounts Receivable
P 72,000
P 72,000
Allowance for Uncollectible Accounts
10,500
Merchandise Inventory
223,400
241,000
17,000
Prepaid Expenses
Office Equipment
17,000
459,000
276,000
Accumulated Depreciation
Accounts Payable
153,000
191,000
191,000
On June 30, Chub invested cash in an amount equal to the current market value of Max's partnership capital. Max,
the managing partner, would earn two- thirds of partnership profits. Chub agreed to accept one-third of the profits.
During the remainder of the year, the partnership earned P450,000. The temporary withdrawals of Max and Chub
were P352,000 and P230,000, respectively.
Questions
1. How much is the adjusted asset of Max?
2. How much is the total asset of the partnership on June 30?
3. How much cash investment did Chub made?
4. How much is the total cash of the partnership on June 30?
5. How much is the total capital of the partnership on June 30?
6. How much is the share of Max in the net income of the partnership?
7. How much is the share of Chub in the net income of the partnership?
8. How much is the new capital of Max after the closing of nominal accounts?
9. How much is the new capital of Chub after the closing of nominal accounts?
10. How much is the adjusted capital of the partnership after the closing of nominal accounts?
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