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Business
Accounting
P 1,00 P 80,000 20,000 60,00 50,0 2,00

P 1,00 P 80,000 20,000 60,00 50,0 2,00

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The partnership of Anthony and Davis had an unprotitable year and agreed to liquidate their business on December 31, 2019. The Statement of Financial Position as of December 31, 2019 is presented below: ASSETS P 1,000 Cash P 80,000 20,000 Accounts Receivable Less Allowance for Bad Debts Merchandise Inventory Prepaid Advertising Office Equipment Less Accumulated Depreciation TOTAL ASSETS 60,000 50,000 2,000 P 100,000 60,000 40.000 P 153,000 LIABILITIES AND EQUITY Accounts Payable Notes Payable (due October 31, 2020) Anthony, Capital Davis, Capital P 20,000 86,000 30,000 17,000 P 153,000 TOTAL LIABILITIES AND EQUITY The information concerning liquidation are as follows: 1. Accounts receivable's net carrying value plus 20% of the estimated bad debts were collected. 2. Merchandise inventory were realized for P 25,000 3. The contract for Prepaid Advertising has a cancellation value of P 800. 4. Office Equipment were realized equal to 60% of their book value. 5. Unrecorded Accounts Payable of P 2,000 were discovered. 6. Bank charges of P 1,000 was added to the note for early payment than the due date. Anthony is personally insolvent. However, Davis' personal assets exceeded his personal liabilities by P 4,000. Anthony and Davis share profits and losses 40%; 60%, respectively. Required: 1. Prepare a schedule showing the net amount of liquidation gain or loss. 2. Prepare a Statement of Liquidation. 3. Journal entries to record the liquidation.
Transcribed Image Text:The partnership of Anthony and Davis had an unprotitable year and agreed to liquidate their business on December 31, 2019. The Statement of Financial Position as of December 31, 2019 is presented below: ASSETS P 1,000 Cash P 80,000 20,000 Accounts Receivable Less Allowance for Bad Debts Merchandise Inventory Prepaid Advertising Office Equipment Less Accumulated Depreciation TOTAL ASSETS 60,000 50,000 2,000 P 100,000 60,000 40.000 P 153,000 LIABILITIES AND EQUITY Accounts Payable Notes Payable (due October 31, 2020) Anthony, Capital Davis, Capital P 20,000 86,000 30,000 17,000 P 153,000 TOTAL LIABILITIES AND EQUITY The information concerning liquidation are as follows: 1. Accounts receivable's net carrying value plus 20% of the estimated bad debts were collected. 2. Merchandise inventory were realized for P 25,000 3. The contract for Prepaid Advertising has a cancellation value of P 800. 4. Office Equipment were realized equal to 60% of their book value. 5. Unrecorded Accounts Payable of P 2,000 were discovered. 6. Bank charges of P 1,000 was added to the note for early payment than the due date. Anthony is personally insolvent. However, Davis' personal assets exceeded his personal liabilities by P 4,000. Anthony and Davis share profits and losses 40%; 60%, respectively. Required: 1. Prepare a schedule showing the net amount of liquidation gain or loss. 2. Prepare a Statement of Liquidation. 3. Journal entries to record the liquidation.
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