1. Prepare the entries to adjust and close books of AA and BB. 2. Prepare the opening entries in the books of the partnership. 3. Prepare the statement of financial position as of September 13,2016
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
On September 13, 2016, AA and BB decided to combine their assets and form a partnership. The partnership is to take over the business assets and assume the business liabilities; and capitals are to be based on net assets and transferred after the following adjustments.
1. BB's inventory is to be valued at P140,000.
2. A 5% allowance for uncollectible accounts is to be established on the accounts receivable of each party.
3. Accrued liabilities of P8,000 are to be recognized in AA's books.
The statements of financial position on September 13 before adjustments are given below.
Required:
1. Prepare the entries to adjust and close books of AA and BB.
2. Prepare the opening entries in the books of the partnership.
3. Prepare the
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