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After C’s admission, the partners agreed to adjust their capital balances to reflect their’ respective interests in the partnership’

After C’s admission, the partners agreed to adjust their capital balances to reflect their’ respective interests in the partnership’

SWFT Comprehensive Volume 2019
SWFT Comprehensive Volume 2019
42nd Edition
ISBN:9780357233306
Author:Maloney
Publisher:Maloney
Chapter21: Partnerships
Section: Chapter Questions
Problem 57P
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After C’s admission, the partners agreed to adjust their capital balances to reflect their’ respective interests in the partnership’s net assets. Cash settlement is to be made between the partners. How much is the cash settlement?

The statement of financial position of the partnership of A and B as of December 31, 20x1 is shown below: Cash 33,354 Accounts receivable 802,426 Inventory 380,137 Land 603,000 Building 428,267 Equipment 85,134 Other assets 5,600 Total assets 2,337,918 Accounts payable Notes payable 422,590 545,000 A, capital 641,976 B, capital Total liabilities and equity 728,352 2,337,918 A and B share in profits and losses equally. On January 1, 20x2, C informed A and B of his intention to invest in the partnership for a 20% interest. The partners agreed on the following adjustments prior to C's admission: o Accounts receivable of P55,000 should be written-off. Inventories of P12,200 are obsolete and have no resale value. The 'Other assets' should be written off.
Transcribed Image Text:The statement of financial position of the partnership of A and B as of December 31, 20x1 is shown below: Cash 33,354 Accounts receivable 802,426 Inventory 380,137 Land 603,000 Building 428,267 Equipment 85,134 Other assets 5,600 Total assets 2,337,918 Accounts payable Notes payable 422,590 545,000 A, capital 641,976 B, capital Total liabilities and equity 728,352 2,337,918 A and B share in profits and losses equally. On January 1, 20x2, C informed A and B of his intention to invest in the partnership for a 20% interest. The partners agreed on the following adjustments prior to C's admission: o Accounts receivable of P55,000 should be written-off. Inventories of P12,200 are obsolete and have no resale value. The 'Other assets' should be written off.
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