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

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

FINANCIAL ACCOUNTING
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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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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