recognized in Castillo's books. The individual trial balances on Augus3 On August 1, Castillo and Dagarag pooled their assets to form a partnership,with the firm to take over their business assets and assume the liabilities.Partners' capitals are to be based on net assets transferred after thefollowing adjustments. (Profits and losses are allocated equally).Dagarag's inventory is to be increased by P14,600; an allowance fordoubtful accounts of P3,650 and P5,475 are to be set up in books of Castilloand Dagarag, respectively; and accounts payable of P14,600 is to bebefore adjustments, follow:CastilloDagarag273,750 412,45018,250 125,925AssetsLiabilitiesWhat is the capital of Castillo and Dagarag after the above adjustments?a. Castillo, P250,937.50; Dagarag, P281,962.50b. Castillo, P273,750; Dagar ag, P295,650C. Castillo, P237,250; Dagarag, P277,400d. Castillo, P237,250; Dagarag, P295,650

The capital gets increased by increase in assets and decreased by increase in liabilities.

Answered: recognized in Castillo's books. The…

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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On October 1, A and B pooled their assets to form a Partnership, with the firm to take over the business assets and assume liabilities. Partners capitals are to be based on net assets transferred after the following adjustments. The partners agreed to the following adjustments: 1. A's inventory is to be increased by P15,000, while B's inventory has a current fair market value of P100,000 and an agreed value of P110,000. B's unadjusted inventory amounted to P90,000. 2. Machinery and equipment are over-depreciated by P5,000 and P8,000 for A and B, respectively. 3. Furnitures and fixtures for partner A has a current fair market value of P60,000 and an agreed value of P50,000. Furnitures and fixtures is carried at its cost amounting to P100,000 with accumulated depreciation of P45,000. 4. Accrued rent income of P10,000 for A, and accrued salaries of P5,000 for B should be recognized on their respective books. The individual trial balances on October 1, before adjustments, follow:…
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. Problem #4 Froilan Labausa contributed land, inventory and P 280,000 cash to a partnership. The land has a book value of P 650, 000 and a market value of P 1,350,000. The inventory has a book value of P 600,000 and a market value of P 510,000. The partnership also assumed a P 350,000 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: prepare the journal entry to record Labausa's and Balahag's investment in the partnership. Problem #5…
. On July 1 of the current year, Abella and Balansay formed a partnership Abella is to invest certain business assets at values which are yet to be agreed upon. He is to transfer his business liabilities and to contribute sufficient cash to bring his total capital to P495,000, which is 60% of the total capital s had been agreed upon. Details regarding the book values of Abella's business assets and liabilities and their corresponding valuation follow: Book values Agreed valuations P148,500 16,500 288,750 P148,500 9,900 Accounts receivable Allowance for doubtful accounts Merchandise inventory Store equipment AD- Store equipment 265,650 74,250 49,500 36,300 Office equipment AD-Office equipment Accounts payable 49,500 26,400 132,000 13,200 132,000 Balansay agrees to invest cash of P82,500 and merchandise valued at current market price. The value of the merchandise to be invested by Balansay and the amount of cash to be invested by Abella are? a. P330,000 and P132,000 respectively. b.…
Ries, Bax, and Thomas invested $80,000, $112,000, and $128,000, respectively, in a partnership. During its first calendar year, the firm earned $249,000. Required Prepare the entry to close the firm’s Income Summary account as of its December 31 year-end and to allocate the $249,000 net income under each of the following separate assumptions. 1. The partners did not agree on a plan and therefore share income equally. 2. The partners agreed to share income and loss in the ratio of their beginning capital investments. 3. The partners agreed to share income and loss by providing annual salary allowances of $66,000 to Ries, $56,000 to Bax, and $80,000 to Thomas; granting 10% interest on the partners’ beginning capital investments; and sharing the remainder equally.
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[The following information applies to the questions displayed below.] Ries, Bax, and Thomas invested $80,000, $112,000, and $128,000, respectively, in a partnership. During its first calendar year, the firm earned $249,000. Required: Prepare the entry to close the firm's Income Summary account as of its December 31 year-end and to allocate the $249,000 net income under each of the following separate assumptions. 2. The partners agreed to share income and loss in the ratio of their beginning capital investments. Complete this question by entering your answers Appropriation General of profits Journal Allocate $249,000 net income in the ratio of their begin (Do not round intermediate calculations.) Supporting Percentage of Total Computations Equity Ries Bax Thomas x X X Income Summary $ 249,000 $ 249,000 $ 249,000 Allocated Income to Capital
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