Problem #3 On June 30, 2021 Gerry and Henry, competitors in business, decide to consolidate their business to form a partnership to be called GH Partnership. The statement of financial position of Gerry and Henry on this date are presented below: Gerry Company Statement of Financial Position June 30, 2021 Assets Cash P5, 000 Accounts receivable 10, 000 Merchandise inventory Furniture and Fixtures Total Assets 8, 000 6. 000 P 29, 000 Liabilities and Equity Accounts payable Gerry Capital Total Liabilities and Equity P 3, 000 26, 000 Р 29, 000 Henry Company Statement of Financial Position June 30, 2021 Assets Cash P4, 000 Accounts receivable 8, 000 Merchandise inventory 10, 000 9. 000 P 31, 000 Furniture and Fixtures Total Assets Liabilities and Equity Accounts payable Henry Capital Total Liabilities and Equity P 6,000 25.000 P31, 000 The conditions agreed by the partners for purposes of determining their interests in the partnership are presented below: a. 10% of accounts receivable is to be set up as uncollectible in each book. b. Merchandise inventory of Henry is to be increased by P 1, 000. c. The furniture and fixtures of Gerry and Henry are to be depreciated by P 600 and P 900 respectively. Required: Prepare the necessary journal entries to record the formation of the partnership.
Problem #3 On June 30, 2021 Gerry and Henry, competitors in business, decide to consolidate their business to form a partnership to be called GH Partnership. The statement of financial position of Gerry and Henry on this date are presented below: Gerry Company Statement of Financial Position June 30, 2021 Assets Cash P5, 000 Accounts receivable 10, 000 Merchandise inventory Furniture and Fixtures Total Assets 8, 000 6. 000 P 29, 000 Liabilities and Equity Accounts payable Gerry Capital Total Liabilities and Equity P 3, 000 26, 000 Р 29, 000 Henry Company Statement of Financial Position June 30, 2021 Assets Cash P4, 000 Accounts receivable 8, 000 Merchandise inventory 10, 000 9. 000 P 31, 000 Furniture and Fixtures Total Assets Liabilities and Equity Accounts payable Henry Capital Total Liabilities and Equity P 6,000 25.000 P31, 000 The conditions agreed by the partners for purposes of determining their interests in the partnership are presented below: a. 10% of accounts receivable is to be set up as uncollectible in each book. b. Merchandise inventory of Henry is to be increased by P 1, 000. c. The furniture and fixtures of Gerry and Henry are to be depreciated by P 600 and P 900 respectively. Required: Prepare the necessary journal entries to record the formation of the partnership.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
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Transcribed Image Text:Problem #3
On June 30, 2021 Gerry and Henry, competitors in business, decide to consolidate their business to form a partnership
to be called GH Partnership. The statement of financial position of Gerry and Henry on this date are presented below:
Gerry Company
Statement of Financial Position
June 30, 2021
Assets
Cash
P 5, 000
Accounts receivable
10, 000
Merchandise inventory
8, 000
Furniture and Fixtures
6. 000
Total Assets
P 29, 000
Liabilities and Equity
Accounts payable
Gerry Capital
Total Liabilities and Equity
P 3, 000
26, 000
P 29, 000
Henry Company
Statement of Financial Position
June 30, 2021
Assets
Cash
P4, 000
Accounts receivable
8, 000
Merchandise inventory
10, 000
9, 000
P 31, 000
Furniture and Fixtures
Total Assets
Liabilities and Equity
Accounts payable
Henry Capital
Total Liabilities and Equity
P 6, 000
25, 000
P 31, 000
The conditions agreed by the partners for purposes of determining their interests in the partnership are presented
below:
10% of accounts receivable is to be set up as uncollectible in each book.
b. Merchandise inventory of Henry is to be increased by P 1, 000.
The furniture and fixtures of Gerry and Henry are to be depreciated by P 600 and P 900 respectively.
a.
c.
Required:
Prepare the necessary journal entries to record the formation of the partnership.
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