For several years, Peejay and Joshua have been operating their own retail pharmacies as sole proprietorships. They decided that several advantages could be gained if they combined their businesses into one operation. They leased a new facility and began operations as a partnership on January 2, 2020. Peejay was able to find a buyer for his prior business and sold it as a going concern. Joshua did not have an opportunity to sell his business so he transferred as many asserts as possible to the new partnership. The following assets were contributed by Peejay and Joshua to start their new business: Peejay Cash Accounts Receivable Inventory Furnishings Ace Dep-Furnishing Office Equipment Acc Dep-Office Equipment Computer System Acc Dep-Computer System Total Accounts Payable (assumed by Partnership) . How much is the opening capital of Joshua? A. P396,500 A. B. C. D. B. P375,000 375,000 37,500 Bonus to Joshua 27,825 Bonus from Peejay 375,000 Joshua Book Value 82,000 48,000 225,000 24,000 (12,000) 38,500 (20,000) 23,200 (17,200) 396,500 25,000 Fair Value 82,000 40,000 220,000 8,000 C. P350,000 D. P366,500 5. If the partners decided that the agreed capitalization ratio is 4.5:5.5, who will give the bonus and how much? 48,750 Bonus from Peejay 48,750 Bonus to Peejay 20,000 5,000 375,000 25,000
For several years, Peejay and Joshua have been operating their own retail pharmacies as sole proprietorships. They decided that several advantages could be gained if they combined their businesses into one operation. They leased a new facility and began operations as a partnership on January 2, 2020. Peejay was able to find a buyer for his prior business and sold it as a going concern. Joshua did not have an opportunity to sell his business so he transferred as many asserts as possible to the new partnership. The following assets were contributed by Peejay and Joshua to start their new business: Peejay Cash Accounts Receivable Inventory Furnishings Ace Dep-Furnishing Office Equipment Acc Dep-Office Equipment Computer System Acc Dep-Computer System Total Accounts Payable (assumed by Partnership) . How much is the opening capital of Joshua? A. P396,500 A. B. C. D. B. P375,000 375,000 37,500 Bonus to Joshua 27,825 Bonus from Peejay 375,000 Joshua Book Value 82,000 48,000 225,000 24,000 (12,000) 38,500 (20,000) 23,200 (17,200) 396,500 25,000 Fair Value 82,000 40,000 220,000 8,000 C. P350,000 D. P366,500 5. If the partners decided that the agreed capitalization ratio is 4.5:5.5, who will give the bonus and how much? 48,750 Bonus from Peejay 48,750 Bonus to Peejay 20,000 5,000 375,000 25,000
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter1: Introductin To Taxation
Section: Chapter Questions
Problem 9P
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Transcribed Image Text:Questions 4 and 5 are based on the following:
For several years, Peejay and Joshua have been operating their own retail pharmacies as sole proprietorships. They
decided that several advantages could be gained if they combined their businesses into one operation. They leased
a new facility and began operations as a partnership on January 2, 2020. Peejay was able to find a buyer for his
prior business and sold it as a going concern. Joshua did not have an opportunity to sell his business so he transferred
as many asserts as possible to the new partnership.
The following assets were contributed by Peejay and Joshua to start their new business:
Peejay
Cash
Accounts Receivable
Inventory
Furnishings
Ace Dep-Furnishing
Office Equipment
Acc Dep-Office Equipment
Computer System
Acc Dep-Computer System
Total
Accounts Payable (assumed by Partnership)
4. How much is the opening capital of Joshua?
A. P396,500
A.
B.
B. P375,000
C
D.
375,000
37,500 Bonus to Joshua
27,825 Bonus from Peejay
375,000
Joshua
Book Value
C. P350,000
82,000
48,000
225,000
24,000
(12,000)
38,500
(20,000)
23,200
(17,200)
396,500
25,000
Fair Value
82,000
40,000
220,000
8,000
20,000
5,000
5. If the partners decided that the agreed capitalization ratio is 4.5:5.5, who will give the bonus and how much?
48,750 Bonus from Peejay
48,750 Bonus to Peejay
375,000
25,000
D. P366,500
na
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