Teddy, Bobbie, Alex, and Gabbie organized a partnership called Four Sisters. Their business is engaged in providing wedding services. Teddy and Bobbie contributed cash of P600,000 each. Alex contributed building and land, which she inherited from her father three (3) years ago. For the transfer tax purposes, the value of the building and land was P900,000. A week before the partnership was formed, several buyers signify their intention of buying the building and land for P920,000. The building has been subjected to a mortgage with a carrying amount of P200,000, which will be assumed by the partnership. Gabbie, being an event planner, contributed her skills and knowledge to the partnership. The partners agreed that Gabbie would be given a salary of P15,000. She will also receive 20% of the remaining profits. Questions: a. What is the value of the building contributed by Alex? Justify your answer in no more than three (3) sentences. b. Give the adjusting entry to be made at the date of formation.
Teddy, Bobbie, Alex, and Gabbie organized a partnership called Four Sisters. Their business is engaged in providing wedding services. Teddy and Bobbie contributed cash of P600,000 each. Alex contributed building and land, which she inherited from her father three (3) years ago. For the transfer tax purposes, the value of the building and land was P900,000. A week before the partnership was formed, several buyers signify their intention of buying the building and land for P920,000. The building has been subjected to a mortgage with a carrying amount of P200,000, which will be assumed by the partnership. Gabbie, being an event planner, contributed her skills and knowledge to the partnership. The partners agreed that Gabbie would be given a salary of P15,000. She will also receive 20% of the remaining profits. Questions: a. What is the value of the building contributed by Alex? Justify your answer in no more than three (3) sentences. b. Give the adjusting entry to be made at the date of formation.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:1. Teddy, Bobbie, Alex, and Gabbie organized a partnership called Four Sisters. Their business is
engaged in providing wedding services. Teddy and Bobbie contributed cash of P600,000 each. Alex
contributed building and land, which she inherited from her father three (3) years ago. For the transfer
tax purposes, the value of the building and land was P900,000. A week before the partnership was
formed, several buyers signify their intention of buying the building and land for P920,000. The building
has been subjected to a mortgage with a carrying amount of P200,000, which will be assumed by the
partnership. Gabbie, being an event planner, contributed her skills and knowledge to the partnership.
The partners agreed that Gabbie would be given a salary of P15,000. She will also receive 20% of the
remaining profits.
Questions:
a. What is the value of the building contributed by Alex? Justify your answer in no more than three (3)
sentences.
b. Give the adjusting entry to be made at the date of formation.
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