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The assets of the tw

The assets of the tw

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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Tanya and Uma, each operating a separate business agreed to join in partnership as of July 1, 2020. The account balances presented by each partner as of this date were as follows: Accounts Cash Accounts Receivable Merchandise Inventory Office Equipment Total Assets Accounts Payable Notes Payable Capitals Total Liabilities and Capital Tanya P 32,000 3,200 40,000 10,000 P 85,200 P 10,000 2,000 73,200 P 85,200 Uma P 12,000 24,000 36,000 12,000 P 84,000 P 16,000 68,000 P 84,000 The assets of the two partners were carefully examined and it was agreed that certain adjustments be made, and the above statements of financial position as adjusted be the basis on which the partnership begins operations. The adjustments agreed upon are as follows: a. Tanya's accounts receivables are to be taken over at a book value less 15% and Uma's accounts receivable at book value less 10%. b. Tanya's office equipment is new and is considered adequate for the new business, therefore, it is decided that Uma dispose of his equipment at the highest cash price possible and that Tanya bear one-fourth of the loss resulting from the sale. Uma's office equipment is disposed of at a book value less 10%. c. It is further agreed that Uma pay sufficient cash to give him a one-half interest in the business after charging to Tanya's capital account his share of the loss on the sale by Uma of office equipment. Instructions: 1. Prepare the journal entries in the books of Tanya and in the books of Uma to give effect to the agreement.
Transcribed Image Text:Tanya and Uma, each operating a separate business agreed to join in partnership as of July 1, 2020. The account balances presented by each partner as of this date were as follows: Accounts Cash Accounts Receivable Merchandise Inventory Office Equipment Total Assets Accounts Payable Notes Payable Capitals Total Liabilities and Capital Tanya P 32,000 3,200 40,000 10,000 P 85,200 P 10,000 2,000 73,200 P 85,200 Uma P 12,000 24,000 36,000 12,000 P 84,000 P 16,000 68,000 P 84,000 The assets of the two partners were carefully examined and it was agreed that certain adjustments be made, and the above statements of financial position as adjusted be the basis on which the partnership begins operations. The adjustments agreed upon are as follows: a. Tanya's accounts receivables are to be taken over at a book value less 15% and Uma's accounts receivable at book value less 10%. b. Tanya's office equipment is new and is considered adequate for the new business, therefore, it is decided that Uma dispose of his equipment at the highest cash price possible and that Tanya bear one-fourth of the loss resulting from the sale. Uma's office equipment is disposed of at a book value less 10%. c. It is further agreed that Uma pay sufficient cash to give him a one-half interest in the business after charging to Tanya's capital account his share of the loss on the sale by Uma of office equipment. Instructions: 1. Prepare the journal entries in the books of Tanya and in the books of Uma to give effect to the agreement.
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