Gloria Detoya and Esterlina Gevera have operated a successful partnership for years, sharing profit and losses equally. Evangelina Madelo is to be admitted to the partnership on June 1 of the current year, in accordance with the following agreement: many a. Assets and liabilities of the old partnership are to be valued at their book values of May 31, except for the following: Accounts receivable amounting to P20,000 are to be written off, and the allowance for uncollectible accounts is to be increased to 5% of the remaining accounts. Merchandise inventory is to be valued at P638,700. Equipment is to be valued at P900,000. b. Madelo is to purchase P300,000 of the ownership interest of Gevera for P375,000 cash and to contribute P350,000 cash to the partnership for a total ownership equity of P650,000. c. The income-sharing ratio of Detoya, Gevera, and Madelo is to be 2:1:1. The post-closing trial balance of Detoya and Gevera as of May 31 follows: Detoya and Gevera Post-Closing Trial Balance May 31, 2019 Cash - 95,000 Accounts Receivable - 214,000 Allowance for Uncollectible Accounts - 5,000 Merchandise Inventory - 586,000 Prepaid Insurance - 35,000 Equipment - 950,000 Accumulated Depreciation-Equipment - 257,000 Detoya, Capital - 750,000 Gevera, Capital - 600,000 Notes Payable - 120,000 Accounts Payable - 148,000 Required: Prepare the balance sheet for the new partnership as at June 1, 2019.
Gloria Detoya and Esterlina Gevera have operated a successful partnership for years, sharing profit and losses equally. Evangelina Madelo is to be admitted to the partnership on June 1 of the current year, in accordance with the following agreement: many a. Assets and liabilities of the old partnership are to be valued at their book values of May 31, except for the following: Accounts receivable amounting to P20,000 are to be written off, and the allowance for uncollectible accounts is to be increased to 5% of the remaining accounts. Merchandise inventory is to be valued at P638,700. Equipment is to be valued at P900,000. b. Madelo is to purchase P300,000 of the ownership interest of Gevera for P375,000 cash and to contribute P350,000 cash to the partnership for a total ownership equity of P650,000. c. The income-sharing ratio of Detoya, Gevera, and Madelo is to be 2:1:1. The post-closing trial balance of Detoya and Gevera as of May 31 follows: Detoya and Gevera Post-Closing Trial Balance May 31, 2019 Cash - 95,000 Accounts Receivable - 214,000 Allowance for Uncollectible Accounts - 5,000 Merchandise Inventory - 586,000 Prepaid Insurance - 35,000 Equipment - 950,000 Accumulated Depreciation-Equipment - 257,000 Detoya, Capital - 750,000 Gevera, Capital - 600,000 Notes Payable - 120,000 Accounts Payable - 148,000 Required: Prepare the balance sheet for the new partnership as at June 1, 2019.
Financial Accounting
14th Edition
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Carl Warren, Jim Reeve, Jonathan Duchac
Chapter12: Accounting For Partnerships And Limited Liability Companies
Section: Chapter Questions
Problem 4PB
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Concept explainers
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.
Question
Gloria Detoya and Esterlina Gevera have operated a successful partnership for years, sharing profit and losses equally. Evangelina Madelo is to be admitted to the partnership on June 1 of the current year, in accordance with the following agreement: many
a. Assets and liabilities of the old partnership are to be valued at their book values of May 31, except for the following:
Accounts receivable amounting to P20,000 are to be written off, and the allowance for uncollectible accounts is to be increased to 5% of the remaining accounts.
Merchandise inventory is to be valued at P638,700. Equipment is to be valued at P900,000.
b. Madelo is to purchase P300,000 of the ownership interest of Gevera for P375,000 cash and to contribute P350,000 cash to the partnership for a total ownership equity of P650,000.
c. The income-sharing ratio of Detoya, Gevera, and Madelo is to be 2:1:1.
The post-closing trial balance of Detoya and Gevera as of May 31 follows:
Detoya and Gevera Post-Closing Trial Balance May 31, 2019
Cash - 95,000
Accounts Receivable - 214,000
Allowance for Uncollectible Accounts - 5,000
Merchandise Inventory - 586,000
Prepaid Insurance - 35,000
Equipment - 950,000
Accumulated Depreciation -Equipment - 257,000
Detoya, Capital - 750,000
Gevera, Capital - 600,000
Notes Payable - 120,000
Accounts Payable - 148,000
Required: Prepare the balance sheet for the new partnership as at June 1, 2019.
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