2.6 Pancho invites Villa in his business. The following accounts appearin the ledger of Pancho prior to the admission of Villa:P 15,00030,0003,00025,00018,00055,000CashAccounts ReceivableAllowance for Impairment LossInventoryEquipment (net)Accounts PayableVilla is to make investment of P 25,000 in cash and is equivalentto 40% of the agreed total capital of the new partnership. It is alsoagreed that the following adjustments slhould be made:1. The allowance for impairment loss account should beincreased 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.

Partnership: A business organization formed by legal agreement between multiple individuals is known…

Answered: REQUIRED: a. How much is the goodwill…

Business

Accounting

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

Problem 1Q

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Question

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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