REQUIRED: a. How much is the goodwill of Pancho? b. Prepare journal entries assuming new set of books will be used.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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2.6 Pancho invites Villa in his business. The following accounts appear
in the ledger of Pancho prior to the admission of Villa:
P 15,000
30,000
3,000
25,000
18,000
55,000
Cash
Accounts Receivable
Allowance for Impairment Loss
Inventory
Equipment (net)
Accounts Payable
Villa is to make investment of P 25,000 in cash and is equivalent
to 40% of the agreed total capital of the new partnership. It is also
agreed that the following adjustments slhould be made:
1. The allowance for impairment loss account should be
increased by P 80o0.
2. Unused office supplies of P 500 are to be recognized.
3. Goodwill of Pancho is to be recognized.
REQUIRED:
a. How much is the goodwill of Pancho?
b. Prepare journal entries assuming new set of books will be used.
Transcribed Image Text:2.6 Pancho invites Villa in his business. The following accounts appear in the ledger of Pancho prior to the admission of Villa: P 15,000 30,000 3,000 25,000 18,000 55,000 Cash Accounts Receivable Allowance for Impairment Loss Inventory Equipment (net) Accounts Payable Villa is to make investment of P 25,000 in cash and is equivalent to 40% of the agreed total capital of the new partnership. It is also agreed that the following adjustments slhould be made: 1. The allowance for impairment loss account should be increased by P 80o0. 2. Unused office supplies of P 500 are to be recognized. 3. Goodwill of Pancho is to be recognized. REQUIRED: a. How much is the goodwill of Pancho? b. Prepare journal entries assuming new set of books will be used.
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