Problem I Ariel, Beauty and Cindy decided to form Disprin Partnership with 2:2:1 profit sharing. Both Ariel and Beauty have existing business. The balance sheet of the two are shown below together with their agreement prior to formation. Ariel Beauty Cash 117 126 Account receivables 100 200 Inventories 50 30 Equipment 80 0 Furniture 0 30 Prepayments 5 15 Total 352 401 Accounts payable 75 95 Capital 277 306 Total 352 401 Partners' agreements: Receivables are 97% collectible Ariel's inventories fair values is at P55 while P10 of Beauty's Inventories were damaged and are only 30% recoverable. The equipment is underdepreciated by P3 and the furniture's value will increase by P4. P2 of Ariel's prepayments were already exhausted while Beauty has unrecorded liability of P7. Cindy will contribute sufficient cash to give her 20% interest 4. How much is the total assets of the newly formed partnership?
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.
Problem I
Ariel, Beauty and Cindy decided to form Disprin Partnership with 2:2:1 profit sharing. Both Ariel and Beauty have existing business. The
Ariel Beauty
Cash 117 126
Inventories 50 30
Equipment 80 0
Furniture 0 30
Prepayments 5 15
Total 352 401
Accounts payable 75 95
Capital 277 306
Total 352 401
Partners' agreements:
Receivables are 97% collectible
Ariel's inventories fair values is at P55 while P10 of Beauty's Inventories were damaged and are only 30% recoverable. The equipment is underdepreciated by P3 and the furniture's value will increase by P4.
P2 of Ariel's prepayments were already exhausted while Beauty has unrecorded liability of P7.
Cindy will contribute sufficient cash to give her 20% interest
4. How much is the total assets of the newly formed partnership?
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