Requirements: Compute the total liabilities after formation
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
On March 1, 2020, P and Q decided to combine their business and form a partnership. Their
They agreed to have the following items recorded in their books:
1. Provide 2% allowance for doubtful accounts.
2. P’s furniture and fixtures should be P31,000, while Q’s office equipment is underdepreciated by P250.
3. Rent expense incurred previously by P was not yet recorded amounting to P1000, while
salary expenses incurred by Q amounting to P800 was also not recorded.
4. The fair value of P’s anf Q’s inventory amounted to P29,500 and P21,000 each
respectively
Requirements:
Compute the total liabilities after formation
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