PROBLEM 1: Individuals with No Existing Business Form a Partnership On February 1, 2025, Froilan Labausa contributed land, inventory, and P280,000 cash to a partnership. The land has a book value of P650,000 and a market value of P1,350,000. The inventory has a book value of P600,000 and a market value of P510,000. The partnership also assumed a P350,000 note payable owed by Labausa that was used to purchase the land. Rosalie Balhag agreed to put up cash equivalent to Labausa's net investment. Required: 1. Prepare the journal entry to record Labausa's and Balhag's investment in the partnership. 2. Prepare the statement of financial position (balance sheet) of the partnership as of February 1, 2025. PROBLEM 2: A Sole Proprietor and an Individual with No Business Form a Partnership Espanol operated a specialty shop that sold fishing equipment and accessories. Her post-closing trial balance on Dec. 31, 2024 is as follows: Cash Fish Post-Closing Trial Balance December 31, 2024 Accounts Receivable Allowance for Uncollectible Accounts Merchandise Inventory Equipment Accumulated Depreciation Accounts Payable Espanol, Capital Debit P 36,000 Credit 150,000 P 16,000 440,000 135,000 75,000 30,000 640,000 P 761,000 P 761,000 Espanol plans to enter into a partnership with trusted associate, Quino, effective January 1, 2025. Profits or losses will be shared equally. Espanol is to transfer all assets and liabilities of her shop to the partnership after revaluation. Quino will invest cash equal to Espanol's investment after revaluation. The agreed values are as follows: accounts receivable (net), P140,000; inventory, P460,000; ⚫ and equipment (net), P124,000. The partnership will operate under the business name of Fish R' Us. Required: 1. Prepare the following entries under Espanol's books: a. Adjusting entry to record agreed valuation of Espanol's assets b. Closing entry to close Espanol's books 2. Prepare the following entries under the partnership's books: a. Entry to record Espanol's investment b. Entry to record Quino's investment 3. Prepare the statement of financial position (balance sheet) of the partnership as of January 1, 2025.

PROBLEM 1: Individuals with No Existing Business Form a Partnership On February 1, 2025, Froilan Labausa contributed land, inventory, and P280,000 cash to a partnership. The land has a book value of P650,000 and a market value of P1,350,000. The inventory has a book value of P600,000 and a market value of P510,000. The partnership also assumed a P350,000 note payable owed by Labausa that was used to purchase the land. Rosalie Balhag agreed to put up cash equivalent to Labausa's net investment. Required: 1. Prepare the journal entry to record Labausa's and Balhag's investment in the partnership. 2. Prepare the statement of financial position (balance sheet) of the partnership as of February 1, 2025. PROBLEM 2: A Sole Proprietor and an Individual with No Business Form a Partnership Espanol operated a specialty shop that sold fishing equipment and accessories. Her post-closing trial balance on Dec. 31, 2024 is as follows: Cash Fish Post-Closing Trial Balance December 31, 2024 Accounts Receivable Allowance for Uncollectible Accounts Merchandise Inventory Equipment Accumulated Depreciation Accounts Payable Espanol, Capital Debit P 36,000 Credit 150,000 P 16,000 440,000 135,000 75,000 30,000 640,000 P 761,000 P 761,000 Espanol plans to enter into a partnership with trusted associate, Quino, effective January 1, 2025. Profits or losses will be shared equally. Espanol is to transfer all assets and liabilities of her shop to the partnership after revaluation. Quino will invest cash equal to Espanol's investment after revaluation. The agreed values are as follows: accounts receivable (net), P140,000; inventory, P460,000; ⚫ and equipment (net), P124,000. The partnership will operate under the business name of Fish R' Us. Required: 1. Prepare the following entries under Espanol's books: a. Adjusting entry to record agreed valuation of Espanol's assets b. Closing entry to close Espanol's books 2. Prepare the following entries under the partnership's books: a. Entry to record Espanol's investment b. Entry to record Quino's investment 3. Prepare the statement of financial position (balance sheet) of the partnership as of January 1, 2025.

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter14: Partnerships And Limited Liability Entities

Section: Chapter Questions

Problem 2BD

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