The balance sheet of A on November 30, 2020 before accepting B as his partner to form AB Partnership is presented below: Assets: Cash 120,000 Accounts receivable 48,000 Less: Allowance for uncollectible accounts 3,000 45,000 Notes receivable 60,000 Merchandise inventory 27,000 Equipment 72,000 Less: Accumulated Depreciation 5,000 66,000 Total assets 318,000 Liabilities and Capital Accounts payable 12,000 Notes payable 60,000 A, Capital 246,000 Total liabilities and capital 318,000 It is agreed that for the purpose of establishing A's interest the following adjustments shall be made: a. The accounts receivable is estimated to be 90% realizable. b. Interest at 8% of notes receivable dated March 1, 2019 is to be accrued. c. Merchandise inventory is to be valued at P21,000. d. The equipment is under-depreciated by P4,800. e. Prepaid expenses of P2,400 and accrued expenses of P7,200 are to be recognized. B is to invest cash to obtain a one-third interest in the partnership. Required: 1. Prepare the following entries in the books of A, as to: a. Adjustments b. Closing c. Investments 2. Prepare the balance sheet after formation of the partnership
The balance sheet of A on November 30, 2020 before accepting B as his partner to form AB Partnership is presented below: Assets: Cash 120,000 Accounts receivable 48,000 Less: Allowance for uncollectible accounts 3,000 45,000 Notes receivable 60,000 Merchandise inventory 27,000 Equipment 72,000 Less: Accumulated Depreciation 5,000 66,000 Total assets 318,000 Liabilities and Capital Accounts payable 12,000 Notes payable 60,000 A, Capital 246,000 Total liabilities and capital 318,000 It is agreed that for the purpose of establishing A's interest the following adjustments shall be made: a. The accounts receivable is estimated to be 90% realizable. b. Interest at 8% of notes receivable dated March 1, 2019 is to be accrued. c. Merchandise inventory is to be valued at P21,000. d. The equipment is under-depreciated by P4,800. e. Prepaid expenses of P2,400 and accrued expenses of P7,200 are to be recognized. B is to invest cash to obtain a one-third interest in the partnership. Required: 1. Prepare the following entries in the books of A, as to: a. Adjustments b. Closing c. Investments 2. Prepare the balance sheet after formation of the partnership
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Instruction: Prepare the answers and solutions in written form using a clean paper (e.g. Yellow pod, bond
paper, notebook etc.) and submit a snapshot in CANVAS.
The balance sheet of A on November 30, 2020 before accepting B as his partner to form AB Partnership
is presented below:
Assets:
Cash
120,000
Accounts receivable
48,000
Less: Allowance for uncollectible accounts
3.000
45,000
Notes receivable
60,000
Merchandise inventory
27,000
Equipment
72,000
Less: Accumulated Depreciation
6,000
56,000
Total assets
318,000
Liabilities and Capital
Accounts payable
12,000
Notes payable
60,000
A, Capital
246,000
Total liabilities and capital
318,000
It is agreed that for the purpose of establishing A's interest the following adjustments shall be made:
a.
The accounts receivable is estimated to be 90% realizable.
b. Interest at 8% of notes receivable dated March 1, 2019 is to be accrued.
c. Merchandise inventory is to be valued at P21,000.
d. The equipment is under-depreciated by P4,800.
e. Prepaid expenses of P2,400 and accrued expenses of P7,200 are to be recognized.
B is to invest cash to obtain a one-third interest in the partnership.
Required:
1. Prepare the following entries in the books of A, as to:
a. Adjustments
b. Closing
c. Investments
2. Prepare the balance sheet after formation of the partnership
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