Fairy Bower - Fair Values of Capital Contributions and P&L Sharing agreementTatianaOberonCashInventoriesP 708,000944 000P 590,0000.LandEquipment826,0000.800,000The partners agreed to share the partnership income and losses in the following manner.Tatiana3%P 140,00060%OberonInterest on beginning balancesSalariesRemainder3%P 140,00040%Requirements1 Prepare journal entries to record the formation of the partnership on January 1.2018 and the eventsdescribed above, including the necessary adjusting entries at year end. Closing entries are notrequired.2 Prepare the statement of comprehensive income for The Fairy Bower for the year ended December31. 2018 with a supporting schedule of income distribution among the partners.3. Prepare the statement of changes in owners equity for The Fairy Bower for the year endedDecember 31,2018. During 2018, the following events occurred:1. Addilional inventory was acquired during he year at a cost of P 354,000 and recprded usingthe perpetual inventory system. As of December 31, 2018, the partnership owedn70,800 toits suppliers.2 In order to facilitate startup operations, the partnership borTowed P 500,000 from a bank onMay 1, 2018. The borowing was evidenced by a 9% interest bearing note and interest ispayable semi-annually. Interest payments due for 2018 are accordingly paid by thepartnership.3. Sales on account amounted to P1,829,000 with related cost of goods sold of P1,058,000. AtDecember 31, 2018, customers owed the partnership P247,300.4. Selling and general expenses, exduding depreciation and interest, amounted to P401 200.On December 31, 2018, P 73,160 of these expenses are unpaid.5. The partnership pays a weekly salary of P 12,800 which is payable every Friday. December31, 2018 falls on a Thursday and this accrual is not yet recorded in the partnership books.6. The equipment contributed by Tatiana has a salvage value of P50,000 after its useful life of8 years and would be depreciated using the straight-line method. On September 1, 2018,the company acquired additional equipment and paid.cash of P180,000 The newequipment has a salvage value of P15,000 and a useful life of 5 years.7 Tatiana and Oberon have drawings of P122, 800 and P92,100, respectively, by the end ofthe year.8 The partnership's inventory per count at the end of the year was P236,000.

A partnership is a type of business where two or more persons enter into a legal agreement to be…

Requirements 1. Prepare journal entries to record the formation of the partnership on January 1, 2018 and the events described above, including the necessary adjusting entries at year end. Closing entries are not required. 2. Prepare the statement of comprehensive income for The Fairy Bower for the year ended December 31, 2018 with a supporting schedule of income distribution among the partners. 3. Prepare the statement of changes in owners' equity for The Fairy Bower for the year ended December 31, 2018.

Requirements 1. Prepare journal entries to record the formation of the partnership on January 1, 2018 and the events described above, including the necessary adjusting entries at year end. Closing entries are not required. 2. Prepare the statement of comprehensive income for The Fairy Bower for the year ended December 31, 2018 with a supporting schedule of income distribution among the partners. 3. Prepare the statement of changes in owners' equity for The Fairy Bower for the year ended December 31, 2018.

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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