Rosfe Badoy formed a partnership with Enrico Yee on a business dealing with motorcycle parts in Davao City. Their capital balances as of this date, follows:R. Badoy100,000.00E. Yee200,000.00Total300,000.00Romanor Gatmaitan, a prospective business associate offers to buy 1/4 of the partnership interest for P85,000.The old profit and loss ratio of the partners is 45% - 55% after which, they will again have to provide a new basis for profit distribution.Answer the following questions;1. How much is the book value of partnership interest acquired by Gatmaitan?Answer:2. How much is the gain or loss on the sale transactions?Answer:3. What is the journal entry to record the admission of Gatmaitan?Answer:

Given Capital Balances Badoy 100,000 Yee 200,000 Total…

Answered: Rosfe Badoy formed a partnership with…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Marie admits Neri as a partner in business. Just before the partnership’s formation, Marie's books showed the following:Cash 2,600Account Receivable 12,000Merchandise Inventory 18,000Accounts Payable 6,200Melai, capital 26,400 It was agreed that, for purpose of establishing Marie's investment in the firm, the following adjustment shall be reflected:1. Allowance for bad debts of 2% should be set up. 2. Merchandise inventory should be valued at P20,200. 3. Prepaid expenses of P350 and accrued expenses of P400 should be recognize.How much cash should Neri invest to secure a one-third interest in the partnership?
(2) Example 3 (Equity: Business Ownership): Hanna, Ursula, Thomas and Günther engage in a partnership named "Chick Enterprise. // Chick generates a net income of 75.000 $. 1) Ursula, Thomas and Günther get salary allowances for thei extra professional service for At clients, as follows: 12.000$ for Ursula; 9.000 $ for Thomas and 3.000 for Günther respectively. 11) Average capital balances during the year are as follows: Hanna Ursula Thomas Gunther 42.000 $ 4.200 $ 12.600 $ 25.200 $ Partners agreed for a 7.25 interest allowance for each partner at the end of the year. 84.000 $ [II) After salary & interest allowances, the remainder will be allocated from a fixed ratio of [5:2:4:1] for [Hanna: Ursula: Thomas: Günther Find each partner's capital (equity) and do the closing entry Example 4 (Equity: Business Ownership): Royal Inc. posesses a capital structure as follows: Luis 20 Hector 10 Sanchez 10 (in.000 $) 2) On March 1, Luis decides to sell 10 $ of his share to Martin. 3) On May 1,…
The Distance Plus partnership has the following capital balances at the beginning of the current year along with respective profit and loss percentages: Tiger (50%) $ 165,000 Phil (20%) 135,000 Ernie (30%) 150,000 Each of the following questions should be viewed independently. Required: If Sergio invests $190,000 in cash in the business for a 20 percent interest, what journal entry is recorded? Assume that the bonus method is used. If Sergio invests $100,000 in cash in the business for a 20 percent interest, what journal entry is recorded? Assume that the bonus method is used. If Sergio invests $120,000 in cash in the business for a 20 percent interest, what journal entry is recorded? Assume that the goodwill method is used. Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Required C If Sergio invests $190,000 in cash in the business for a 20 percent interest, what journal entry is…
The following are the capital balances and share in each profit of Ring Partnership:Aragorn 150 40%Legolas 250 40%Gimli 300 20% 9. If Gandalf was admitted by investing sufficient cash for 20% interest, how much must be his investment?10. If Gandalf was admitted by paying the partners P100 for 10% interest in the firm, how much will be the capital of Aragorn after the admission if implied goodwill was recorded?11. How much did Gandalf have invested for 25% interest if after his admission in the firm the capital balance of Legolas increased by P20?12. If Gimli withdrew from the firm and received P360, how much is the capital of Legolas if prior to withdrawal, the firm recorded a goodwill of P200.13. If the partnership was liquidated and P250 is ready for distribution, how much will Gimli received?14. If the partnership was liquidated and Gimli received P210, how much did Legolas received?…
A&B form a partnership with A being the limited partner (LP)who will invest $150,000 and B being the general partner (GP). The group finds a property for $700,000 and takes a mortgage for $550,000, interest only at 6%. They agree to a 90/10 split on the profits and distributions while the property is owned by the group. Assume the following: Gross Income- $125,000 LESS VACANCY- $6,250 LESS OPERATING EXPENSES - $27,000 What is the capital account of investor A (the LP) $87,000 $97,125 $139,875 $150,000
Gerald and Julia are joining their separate business to form a partnership and they agreed to share profits in the manner of 55% for Gerald and 45% for Julia. Property is to be contributed for a total capital of P800,000. The partners agreed to make their capital accounts equal after formation. How much cash must be contributed by each of the partners after they contributed their properties? Gerald Julia Book Value Fair Value Book Value Fair Value Accounts Receivable 60,000 60,000 - - Inventories 60,000 90,000 160,000 180,000 Equipment 100,000 80,000 180,000 190,000 Accounts Payable 30,000 30,000 20,000 20,000
Karasuma and Irina are partners who have capitals of P6,000 and P4,800 and who share profits in the ratio of 3:2. Koro is admitted as a partner upon investing cash of P5,000, with profits to be shared equally. Assume that Koro is allowed a 40% interest in the firm. What entries would be made in recording the investment if the asset revaluation method is used? What entries would be made if the bonus method is used? Which method will be preferred by Koro? How much will Koro gain by the use of this method?

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