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Required: Use Bonus and Goodwill Method in computing the Capital balances of Claire, Dolly. and Ellery.

Required: Use Bonus and Goodwill Method in computing the Capital balances of Claire, Dolly. and Ellery.

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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Claire,Dolly and Ellery formed the CDE Partnership on September 1, 2016, with the following assets, measured at book values in their respective records, contributed by each partner: CLAIRE 486,000 460,107 231,903 DOLLY ELLERY Cash Accounts Receivable Property, Plant and Equipment 109,620 141,000 2,094,390 450,000 A part of Claire's cash contribution, P324,000, comes from personal borrowings. Also, PPE of Claire and Dolly are mortgaged with the bank for P1,458,000 and P108,000, respectively. The partnership is to assume responsibility for these PPE mortgages. The fair value of the accounts receivable contributed by Ellery is P137,000 while the PPE contributed by Dolly at this date is P510,300. The partners have agreed to share interests on a 5:3:2 ratio, to Claire, Dolly and Ellery, respectively. Required: Use Bonus and Goodwill Method in computing the Capital balances of Claire, Dolly. and Ellery.
Transcribed Image Text:Claire,Dolly and Ellery formed the CDE Partnership on September 1, 2016, with the following assets, measured at book values in their respective records, contributed by each partner: CLAIRE 486,000 460,107 231,903 DOLLY ELLERY Cash Accounts Receivable Property, Plant and Equipment 109,620 141,000 2,094,390 450,000 A part of Claire's cash contribution, P324,000, comes from personal borrowings. Also, PPE of Claire and Dolly are mortgaged with the bank for P1,458,000 and P108,000, respectively. The partnership is to assume responsibility for these PPE mortgages. The fair value of the accounts receivable contributed by Ellery is P137,000 while the PPE contributed by Dolly at this date is P510,300. The partners have agreed to share interests on a 5:3:2 ratio, to Claire, Dolly and Ellery, respectively. Required: Use Bonus and Goodwill Method in computing the Capital balances of Claire, Dolly. and Ellery.
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