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Prepare the following entries in the books of Perseus, as to: 1. Adjustments 2. Closing entries

Prepare the following entries in the books of Perseus, as to: 1. Adjustments 2. Closing entries

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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2. The balance sheet of Perseus on January 31, 2020 before accepting Pegasus as his partner to form PP Partnership is presented below: Perseus Balance Sheet January 31, 2020 Assets Cash 120,000 Accounts Receivable 45,000 Notes receivable 60,000 Merchandise inventory 27,000 Equipment б6,000 Total assets P 318,000 Liabilities and Capital Accounts payable 12,000 Notes payable 60,000 Perseus, capital 246,000 Total liabilities and capital P. 318,000
Transcribed Image Text:2. The balance sheet of Perseus on January 31, 2020 before accepting Pegasus as his partner to form PP Partnership is presented below: Perseus Balance Sheet January 31, 2020 Assets Cash 120,000 Accounts Receivable 45,000 Notes receivable 60,000 Merchandise inventory 27,000 Equipment б6,000 Total assets P 318,000 Liabilities and Capital Accounts payable 12,000 Notes payable 60,000 Perseus, capital 246,000 Total liabilities and capital P. 318,000
It is agreed that for purposes of establishing Perseus' interest the following adjustments shall be made: a) The accounts receivable is estimated to be 90% realizable. b) Interest at 8% on notes receivable dated April 30, 2019 is to be accrued. c) The merchandise inventory is to be valued at P21,000. d) The equipment is under-depreciated by P4,800. e) Prepaid expenses of P2,400 and accrued expenses of P7,200 are to be recognized. Pegasus is to invest cash to obtain a one-third interest in the partnership. Required: Prepare the following entries in the books of Perseus, as to: 1. Adjustments 2. Closing entries • Prepare the following entries in the partnership books to record the partnership formation.
Transcribed Image Text:It is agreed that for purposes of establishing Perseus' interest the following adjustments shall be made: a) The accounts receivable is estimated to be 90% realizable. b) Interest at 8% on notes receivable dated April 30, 2019 is to be accrued. c) The merchandise inventory is to be valued at P21,000. d) The equipment is under-depreciated by P4,800. e) Prepaid expenses of P2,400 and accrued expenses of P7,200 are to be recognized. Pegasus is to invest cash to obtain a one-third interest in the partnership. Required: Prepare the following entries in the books of Perseus, as to: 1. Adjustments 2. Closing entries • Prepare the following entries in the partnership books to record the partnership formation.
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