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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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What amount must be invested by GREEN?

Red, White and Blue are partners ina business, and in its profits at the respective ratio of 5:3:2. On January 3, 2020, they admit Green, who is to invest in the firm sufficient cash to have a one-third interest in the partnership capital and profits. The following trial balance is taken from the original partnership's records: Red, White and Blue Trial Balance Debit Credit P 100,000 Cash Marketable securities Accounts receivable 75,000 225,000 P 80,000 Accounts payable Red, Capital White, Capital Blue, Capital 175,000 100,000 45,000 Total P 400,000 P 400,000 The securities have a market value of P50,000, and an allowance of P25,000 was expected to cover collection losses on the receivables. No other adjustments of the net assets are considered necessary: however, the three partners among themselves must bring the balance in their capital accounts into agreement with their interest in profits. What amount must be invested by Green?
Transcribed Image Text:Red, White and Blue are partners ina business, and in its profits at the respective ratio of 5:3:2. On January 3, 2020, they admit Green, who is to invest in the firm sufficient cash to have a one-third interest in the partnership capital and profits. The following trial balance is taken from the original partnership's records: Red, White and Blue Trial Balance Debit Credit P 100,000 Cash Marketable securities Accounts receivable 75,000 225,000 P 80,000 Accounts payable Red, Capital White, Capital Blue, Capital 175,000 100,000 45,000 Total P 400,000 P 400,000 The securities have a market value of P50,000, and an allowance of P25,000 was expected to cover collection losses on the receivables. No other adjustments of the net assets are considered necessary: however, the three partners among themselves must bring the balance in their capital accounts into agreement with their interest in profits. What amount must be invested by Green?
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