Walangbuhay and Maylangit are partners with a profit and loss sharing ratio of 60%-40%. Walangbuhay died of a cardiac arrest on February 14 and immediately an interim financial statement was prepared as of that cut-off date which shows the following capital balances without recognizing the accrued liability, estimated/net realizable value and fair market values of the non-cash assets. Partners Capital balances as of February 14 Walangbuhay P950,000 Maylangit 765,000 The following adjustments should be made: Book Value Fair Value Accounts receivable P 65,000 P 60,000 Inventory 130,000 145,000 Equipment 200,000 250,000 Accrued expenses of P10,000 should be recognized. Required: 1. Adjusting entries to update the balances of accounts at the time of death 2. Show the computation of Maylangit and Walangbuhay’s adjusted capital balance. 3. Journal entry to record the settlement of the heirs of Walangbuhay.
Walangbuhay and Maylangit are partners with a
Partners Capital balances as of February 14
Walangbuhay P950,000
Maylangit 765,000
The following adjustments should be made:
Book Value Fair Value
Accounts receivable P 65,000 P 60,000
Inventory 130,000 145,000
Equipment 200,000 250,000
Accrued expenses of P10,000 should be recognized.
Required:
1.
2. Show the computation of Maylangit and Walangbuhay’s adjusted capital balance.
3.
4. If Maylangit setlles the claim for P1,000,000, what is the necessary entry if the excess
payment he gave was treated as a bonus.
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