ABC, a sole proprietor, agreed to form a partnership with EFG in a business. Accounts in the ledger for ABC on September 30, 2021, just before the formation show the following balances: P 26,000 120,000 180,000 Accounts Payable АВС, Саpital P 62,000 264,000 Cash Accounts Receivable Merchandise Inventory It is agreed that for purposes of establishing ABCS interest, the following adjustments should be made: An allowance for doubtful accounts of 2% of accounts receivable is to be established. The merchandise inventory is to be valued at P202,000. Prepaid expenses of P6,500 and accrued liabilities of P4,000 are to be established. EFG is to invest sufficient funds in order to receive a 1/3 interest in the partnership. 4. How much must EFG contribute?
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- On October 01, 2019, Benny and Joey pooled their resources in a partnership with the firm taking over their business assets and assuming their business liabilities. They agreed to make the following adjustments and to make settlement among themselves to conform to the 40:60 capital and profit and loss ratio. ➢ Joey’s inventory be reduced by P3,000. ➢ Allowance for doubtful accounts be recognized in the amount of P1,500 each. ➢ P4,000 of unrecorded accounts payable to supplier be recorded in the books of Benny ➢ Accrued utilities be recognized in the books of Benny, P1,200. ➢ Store equipment in the books of Joey are under depreciated by P5,000. The individual trial balance before adjustments show the following: BennyJoey AssetsP120,000P150,000 Liabilities 25,000 35,000 Capital 95,000 115,000 The capital balances of the partners that conform with their agreement are: Benny: ___________________Joey: _____________________Z admits A as a partner in business. Accounts in the ledger for Z on November 20, 2018, just before the admission of A, show the following balances: Cash P 6,800Accounts Receivable 14,200Merchandise Inventory 20,000Prepaid expense 1,000Accounts Payable 9,000Z, Capital 33,000 It is agreed that the purposes of establishing Z's interest the following adjustments shall be made:a) An allowance for doubtful accounts of 3% of accounts receivable is to be establishedb) The merchandise inventory is to be valued at P23,000.c) Prepaid salary expenses of P600 and accrued rent expense of P800 are to be recognized. A is to invest sufficient cash to obtain a 1/3 interest in the partnership.(1) Z's adjusted capital before…On April 30, 2021, AAA admits BBB for an interest in his business. On this date, AAA's capital account shows a balance of P 158,400. The following were agreed upon before the formation of the partnership: Prepaid expenses of P17,500 and accrued expenses of P5,000 are to be recognized. 5% of the outstanding accounts receivable of AAA amounting to P100,000 is to be recognized as uncollectible. BBB is to be credited with a one-third interest in the partnership and is to invest cash. Determine the amount of cash to be invested by BBB: fullscreen
- On January 1, 2021, Entity A and Entity B incorporated AB Company. The contractual agreement provided that the decisions on relevant activities will require the unanimous consent of both Entity A and Entity B, and they will have right to the net assets of AB Company. Entity A and Entity B invested P400,000 and P600,000 respectively, equivalent to 40:60 capital interest of AB Company. The financial statements of AB Company provided the following data for its two-year operation (see image below).1. How much is the balance of Investment in Joint Venture to be reported by Entity B in its Statement of Financial Position at December 31, 2022? 2. How much is the balance of Investment in Joint Venture to be reported by Entity A in its Statement of Financial Position at December 31, 2021? _______________On July 1, 2020, Wency and William agreed to form a partnership from their respective proprietorship businesses and to share profits equally. Wency and William’s balance sheet before the formation were: Wency William Cash P 6,000 P 15,000 Accounts receivable 36,000 21,000 Merchandise inventory 99,000 126,000 Prepaid rent 12,000 Store equipment 120,000 90,000 Accum. Depreciation ( 45,000) ( 54,000) Building 375,000 Accum. Depreciation (75,000) Land 180,000 - Totals P 696,000 P 210,000 Accounts payable P 22,500 P 9,000 Mortgage payable 180,000 - Capital 493,500 201,000 Totals P 696,000 P 210,000 The fair values of Wency’s and William’s assets were: Wency William Merchandise inventory P 81,000 P 135,000 Prepaid rent - 0 Store equipment 45,000 19,500 Building 750,000 -…As of July 1, 2020, MM and AA decided to form a partnership. Their balance sheets on this date are: Cash Accounts Receivable Allowance for doubtful accounts Merchandise Inventory Machinery and Equipment Total P705,000 MM AA P 38,000 255,000 (30,000) 202,000 270,000 P735,000 240,000 495,000 P735,000 P 15,000 680,000 (140,000) - 150,000 Accounts Payable MM, capital AA, capital Total P705,000 135,000 570,000 - The partners agreed that the machinery and equipment of MM is under depreciated by P15,000 and that of AA by P45,000. Allowances for doubtful accounts is to be set up amounting to P120,000 for MM and P40,000 for AA. The partnership agreement provides for the profit and loss ratio and capital interest of 60% to MM and 40% to AA with AA’s capital as base. How much cash must MM invest to bring the partner's capital balances proportionate to their profit and loss ratio?
- On January 1, 2021, A and B, both sole proprietors, decided to form a partnership to expand both of their businesses. According to their agreement, they will split profits and losses 75:25 and their initial capital ratio will also reflect that ratio.The following are A and B’s Statements of Financial Position (Attached in the photo): The values reflected in the Statement of Financial Position are already at fair values, except for the following accounts: - A's Accounts Receivable is now 20,000 less than what is stated in his Statement of Financial Position.- Both Inventories of A and B are now 90,000 and 70,000 respectively.- Equipment for B has an assessed value of 275,000, appraised value of 250,000 and book value of 200,000.- Additional accrued expenses are to be established in the amount of 10,000 for B only while additional accounts payable in the amount of 5,000 for A- It is also agreed that all liabilities will be assumed by the partnership, except for the notes payable of B…On January 1, 2021, A and B, both sole proprietors, decided to form a partnership to expand both of their businesses. According to their agreement, they will split profits and losses 75:25 and their initial capital ratio will also reflect that ratio.The following are A and B’s Statements of Financial Position (Attached in the photo): The values reflected in the Statement of Financial Position are already at fair values, except for the following accounts: - A's Accounts Receivable is now 20,000 less than what is stated in his Statement of Financial Position.- Both Inventories of A and B are now 90,000 and 70,000 respectively.- Equipment for B has an assessed value of 275,000, appraised value of 250,000 and book value of 200,000.- Additional accrued expenses are to be established in the amount of 10,000 for B only while additional accounts payable in the amount of 5,000 for A- It is also agreed that all liabilities will be assumed by the partnership, except for the notes payable of B…On August 1, SS and UR pooled their assets to form a partnership, with the firm to take over their business assets and assume the liabilities. Partnership capitals are to be based on net assets transferred after the following adjustments: The inventory of UR is to be increased by P4,000; an allowance for doubtful accounts of P1,000 and P1,500 is to be set up in the books of SS and UR, respectively; and accounts payable is to be recognized in SS’s books. Profits and losses are allocated equally. The individual trial balances on August, before adjustments follow: SS URAssets P75,000 P113,000Liabilities 5,000 34,000 Required: Prepare the journal entries to record the adjustments in the books of SS and UR.
- The condensed statement of financial position of the partnership of Buenaflor and Gangoso as of December 31, 2020 showed the following: Total assets P 200, 000Total liabilities 40, 000Buenaflor, Capital 80, 000Gangoso, Capital 80, 000 On this date, the partnership was dissolved and its net assets transferred to a newly formed corporation.The fair value of the assets was P 24, 000 more than the carrying value on the firm’s books. REQUIRED: Prepare the journal entries in the books of the corporation with P 1 par ordinary share.Ocean Ltd is the parent entity to the wholly owned subsidiaries of River Ltd, Creek Ltd, and Puddle Ltd. During the year ended 30 June 2022 the following transactions occurred within Ocean Ltd group. The perpetual inventory system has been adopted by all entities in the Ocean Ltd group and the tax rate is 30% for all accounting periods. On 01 July 2021 Ocean Ltd sold an item of equipment to Creek Ltd for $850,000 cash. The original cost of the equipment was $950,000. Ocean Ltd adopted an accounting policy whereby equipment was being depreciated on a straight line basis over its useful life of 8 years. The carrying amount of the equipment in Ocean Ltd financial statements at the date of sale was $520,000. Subsequent to the transfer, Creek Ltd depreciated the equipment on a straight line basis over its remaining useful life of 3 years. Required: Fill in the missing amount for the following accounts that will appear in the consolidated adjusting journal…On January 1, 2021, Parent Company acquires 80% of the equity interests of Subsidiary Company, a private entity, in exchange for cash of P1,500,000. The management of Parent initially measures the separately recognizable identifiable assets acquired and the liabilities assumed as of the acquisition date in accordance with the requirements of IFRS 3. The identifiable assets are measured at P2,500,000 and the liabilities assumed are measured at P500.000. Parent Company engages an independent consultant, who determines that the fair value of the 20% non-controlling interest in Subsidiary is P420,000. What is the amount of goodwill (gain or bargain purchase) from the business combination?