a. Prepare two journal entries to set up the partnership b. Prepare a statement of financial position for the partnership as at July 1 just after formation c. Profit (before interest and salaries) on Dec 31 was 120,500. Cash withdrawals made by Bruce and Rachel amounted to 30,000 and 40,000 respectively. Prepare a profit distribution table and one entry to record the distribution.
a. Prepare two journal entries to set up the partnership b. Prepare a statement of financial position for the partnership as at July 1 just after formation c. Profit (before interest and salaries) on Dec 31 was 120,500. Cash withdrawals made by Bruce and Rachel amounted to 30,000 and 40,000 respectively. Prepare a profit distribution table and one entry to record the distribution.
a. Prepare two journal entries to set up the partnership b. Prepare a statement of financial position for the partnership as at July 1 just after formation c. Profit (before interest and salaries) on Dec 31 was 120,500. Cash withdrawals made by Bruce and Rachel amounted to 30,000 and 40,000 respectively. Prepare a profit distribution table and one entry to record the distribution.
Bruce and Rachel agree to form a partnership on July 1. Bruce, who has been trading as a sole proprietor, will invest certain business assets at agreed valuations, transfer his business liabilities and contribute sufficient cash to bring his total contribution to a 60% interest over the new business. Details of Bruce's assets and liabilities are given below (please see the attached image)
Rachel agrees to bring in inventory with a value of P146,500 and P93,500 in cash for a 40% interest in the partnership.
The partners have agreed on the following:
a) capital accounts will remain fixed;
b) 12% interest profit computed on capital;
c) salaries of P30,000 each for 2019 but will be twice this amount next year and thereafter;
d)10% interest charge on partners' drawings made beyond the agreed salaries; and
e)remaining profits are to be shared equally.
Directions:
a. Prepare two journal entries to set up the partnership
b. Prepare a statement of financial position for the partnership as at July 1 just after formation
c. Profit (before interest and salaries) on Dec 31 was 120,500. Cash withdrawals made by Bruce and Rachel amounted to 30,000 and 40,000 respectively. Prepare a profit distribution table and one entry to record the distribution.
d. Set up the general ledger (T Accounts) accounts to show each partner's equity.
e. Prepare a statement of changes in partners equitv.
Transcribed Image Text:Bruce and Rachel agree to form a partnership on July 1. Bruce, who has been trading as a
sole proprietor, will invest certain business assets at agreed valuations, transfer his
business liabilities and contribute sufficient cash to bring his total contribution to a 60%
interest over the new business. Details of Bruce's assets and liabilities are given below.
Agreed value
P 30,000
138,000
240,000
200,000
14,000
8.
Book value
P32,000
240,000
322,000
200,000
14,000
Accounts Receivable
Inventory
Equipment
Accounts Payable
Notes Payable
Rachel agrees to bring in inventory with a value of P146,500 and P93,500 in cash for a
40% interest in the partnership.
The partners have agreed on the following:
a) capital accounts will remain fixed;
b) 12% interest profit computed on capital;
c) salaries of P30,000 each for 2019 but will be twice this amount next year and thereafter;
d) 10% interest charge on partners' drawings made beyond the agreed salaries; and
e) remaining profits are to be shared equally.
Direction:
Prepare two journal entries to set up the partnership.
b. Prepare a statement of financial position for the partnership as at July 1 just after formation.
c. Profit (before interest and salaries) on Dec. 31 was P120,500. Cash withdrawals
made by Bruce and Rachel amounted to P30,000 and P40,000, respectively. Prepare
a.
a profit distribution table and one entry to record the distribution.
d.
Set up the general ledger (T Accounts) accounts to show each partner's equity.
e. Prepare a statement of changes in partners' equitv.
ang aorned P250 000 before tax with
Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.
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