PROBLEM E Mulles, the owner of a successful fertilizer business, felt that it is time to expand operations. Mulles offered to form a partnership with Lucena, the owner of a nearby warehouse. The partnership would be called Mulles & Lucena Storage and Sales. Lucena accepted Mulles' offer and the partnership was formed on July 1,2024. Presented below is the trial balance for Mulles Fertilizer Supply on June 30, 2024: Cash Accounts Receivable Allowance for Uncollectible Accounts. Inventory Prepaid Rent Store Equipment Accumulated Depreciation Notes Payable Accounts Payable Mulles, Capital Total P 229,500 2,103,000 P 117,000 1,012,500 29,250 390,000 P3,764,250 97,500 330,000 505,500 2,714,250 P3,764,250 The partners agreed to share profits and losses equally and decided to invest an equal amount in the partnership. Lucena and Mulles agreed that Lucena's land is worth P500,000 and his building P1,450,000. Lucena is to contribute cash in an amount sufficient to make his capital account balance equal to Mulles. An agreement is reached by the two partners on the following items: a. The accounts receivable is to be valued at P1,799,000 and the allowance for uncollectible accounts will be eliminated. b. Inventory is to be decreased by P112,500. c. The prepaid rent is for the warehouse used by Mulles. All merchandise will be transferred to Lucena's building. No refund will be received on the unused rent paid in advance. d. The store equipment has a fair value of P300,000. e. All the other assets and liabilities are to be transferred at their book values. Required: 1. Prepare the necessary journal entries: a. To record the adjustments to Mulles' assets b. To close the books of Mulles 2. Prepare the necessary journal entries in the books of the partnership: a. To record Mulles' investment b. To record Lucena's investment 3. Prepare the statement of financial position of the partnership after its formation. PROBLEM F The business assets of Geron and Yumol appear below: Geron Yumol Cash P Accounts Receivable 11,000 P 234,536 22,354 567,890 Inventories 120,035 260,102 Land 603,000 Building 428,267 Furniture and Fixtures 50,345 34,789 Other Assets 2,000 3,600 Total P1,020,916 P1,317,002 Account Payable Notes Payable Geron, Capital Yumol, Capital Total P 178,940 P 243,650 200,000 641,976 P1,020,916 345,000 728,352 P1,317,002 On July 1, 2024, Geron and Yumol agreed to form a partnership contributing their assets and equities subject to the following adjustments: a. Accounts receivable of P20,000 in Geron's books and P35,000 in Yumol's are uncollectible. b. Inventories of P5,500 and P6,700 are worthless in Geron's and Yumol's respective books. c. Other assets of P2,000 for Geron and P3,600 for Yumol are to be written off. Required: 1. Prepare the necessary journal entries: a. To record the adjustments to Geron's assets b. To close the books of Geron 2. Prepare the necessary journal entries: a. To record the adjustments to Yumol's assets b. To close the books of Yumol 3. Prepare the necessary journal entries in the books of the partnership: a. To record Geron's investment b. To record Yumol's investment 4. Prepare the statement of financial position of the partnership after its formation.

PROBLEM E Mulles, the owner of a successful fertilizer business, felt that it is time to expand operations. Mulles offered to form a partnership with Lucena, the owner of a nearby warehouse. The partnership would be called Mulles & Lucena Storage and Sales. Lucena accepted Mulles' offer and the partnership was formed on July 1,2024. Presented below is the trial balance for Mulles Fertilizer Supply on June 30, 2024: Cash Accounts Receivable Allowance for Uncollectible Accounts. Inventory Prepaid Rent Store Equipment Accumulated Depreciation Notes Payable Accounts Payable Mulles, Capital Total P 229,500 2,103,000 P 117,000 1,012,500 29,250 390,000 P3,764,250 97,500 330,000 505,500 2,714,250 P3,764,250 The partners agreed to share profits and losses equally and decided to invest an equal amount in the partnership. Lucena and Mulles agreed that Lucena's land is worth P500,000 and his building P1,450,000. Lucena is to contribute cash in an amount sufficient to make his capital account balance equal to Mulles. An agreement is reached by the two partners on the following items: a. The accounts receivable is to be valued at P1,799,000 and the allowance for uncollectible accounts will be eliminated. b. Inventory is to be decreased by P112,500. c. The prepaid rent is for the warehouse used by Mulles. All merchandise will be transferred to Lucena's building. No refund will be received on the unused rent paid in advance. d. The store equipment has a fair value of P300,000. e. All the other assets and liabilities are to be transferred at their book values. Required: 1. Prepare the necessary journal entries: a. To record the adjustments to Mulles' assets b. To close the books of Mulles 2. Prepare the necessary journal entries in the books of the partnership: a. To record Mulles' investment b. To record Lucena's investment 3. Prepare the statement of financial position of the partnership after its formation. PROBLEM F The business assets of Geron and Yumol appear below: Geron Yumol Cash P Accounts Receivable 11,000 P 234,536 22,354 567,890 Inventories 120,035 260,102 Land 603,000 Building 428,267 Furniture and Fixtures 50,345 34,789 Other Assets 2,000 3,600 Total P1,020,916 P1,317,002 Account Payable Notes Payable Geron, Capital Yumol, Capital Total P 178,940 P 243,650 200,000 641,976 P1,020,916 345,000 728,352 P1,317,002 On July 1, 2024, Geron and Yumol agreed to form a partnership contributing their assets and equities subject to the following adjustments: a. Accounts receivable of P20,000 in Geron's books and P35,000 in Yumol's are uncollectible. b. Inventories of P5,500 and P6,700 are worthless in Geron's and Yumol's respective books. c. Other assets of P2,000 for Geron and P3,600 for Yumol are to be written off. Required: 1. Prepare the necessary journal entries: a. To record the adjustments to Geron's assets b. To close the books of Geron 2. Prepare the necessary journal entries: a. To record the adjustments to Yumol's assets b. To close the books of Yumol 3. Prepare the necessary journal entries in the books of the partnership: a. To record Geron's investment b. To record Yumol's investment 4. Prepare the statement of financial position of the partnership after its formation.

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)

22nd Edition

ISBN:9781305666160

Author:James A. Heintz, Robert W. Parry

Publisher:James A. Heintz, Robert W. Parry

Chapter19: Accounting For Partnerships

Section: Chapter Questions

Problem 1MP

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