Hi I just want to clarify the solution provided for our review material:In adjusting the capital accounts, why is under depreciated in the equipment of Francis subtracted and over depreciation added in Rinna? Does this apply to all problems that deals with over depreciation and under depreciation? Isn't it, add when under depreciated and subtract when over depreciated? For problems 31-33Francis and Rinna decided to form a partnership during 2020. The following are theirstatement of financial position on the date of formationFrancisRinnaCash131,250328,125Accounts Receivable2,975,0001,793,750Inventories1,750,0001,771,875Equipment1,312,5002,537,500Total6,168,7506,431,250Accounts Payable918,7502,318,750Francis, Capital5,250,000Rinna, Capital4,112,500Total6,168,7506,431,250The following are based on their agreement• Equipment of Francis is under-depreciation by P175,000 and the equipment of Rinnais over-depreciated by P262,500Allowance for doubtful accounts is to be set up amounting to P595,000 forFrancis and P393,750 for RinnaInventories in the amount of P43,750 and P30,625 are worthless in the books ofFrancis and Rinna, respectivelyThe partnership agreement provides a profit and loss ratio and capital interestratio of 70% and 30% for Francis and Rinna, respectivelyFrancis will invest or withdraw sufficient amount of cash to be in accordance totheir capital interest ratio31. What is the amount to be credited to Rinna's capital account in the partnership?a) 3,425,625b) 4,436,250c) 3,950,620d) 3,950,62532. What is the agreed combined partnership capital?a) 11,418,750b) 14,787,500c) 13,168,750d) 5,643,75033. What is the amount of cash to be additionally invested or withdrawn by Francis inaccordance with their agreement?a) P4,781,875 investb) P3,556,875 investc) P4,781,875 withdrawd) P3,556,875 withdraw 31- 33)FrancisRinnaCapital5,250, 0004, I12,500Equipment CAS, 000)ADA(545,000)CA3.750)202, SOO(313, 750)(30, U25)3, 950, U25 (31)InventoryAdjustedAdati Inv.4,436, 2504.781, 875 ( 33)Agreta Cap.9,218, 125Ttai Partnercnip capital3,950,625 ÷ 0.313,l48,750 (32)* Francis agrecd capital13, IUP, 730 x70%9, 218, 25%3D

Under depreciation means the depreciation recorded in the books is less than the required…

I just want to clarify the solution provided for our review material: In adjusting the capital accounts, why is under depreciated in the equipment of Francis subtracted and over depreciation added in Rinna? Does this apply to all problems that deals with over depreciation and under depreciation? Isn't it, add when under depreciated and subtract when over depreciated?

I just want to clarify the solution provided for our review material: In adjusting the capital accounts, why is under depreciated in the equipment of Francis subtracted and over depreciation added in Rinna? Does this apply to all problems that deals with over depreciation and under depreciation? Isn't it, add when under depreciated and subtract when over depreciated?

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter10: Partnerships: Formation, Operation, And Basis

Section: Chapter Questions

Problem 2BCRQ

See similar textbooks

Similar questions

The partnership of Tatum and Brook shares profits and losses in a 60:40 ratio respectively after Tatum receives a 10,000 salary and Brook receives a 15,000 salary. Prepare a schedule showing how the profit and loss should be divided, assuming the profit or loss for the year is: A. $40,000 B. $25,000 C. ($5,000) In addition, show the resulting entries to each partners capital account. Tatums capital account balance is $50,000 and Brooks is $60,000.
The partnership of Chase and Chloe shares profits and losses in a 70:30 ratio respectively after Chloe receives a $10,000 salary. Prepare a schedule showing how the profit and loss should be divided, assuming the profit or loss for the year is: A. $ 30,000 B. $ 6,000 C. ($10,000)
The partnership of Tasha and Bill shares profits and losses in a 50:50 ratio, and the partners have capital balances of $45,000 each. Prepare a schedule showing how the bonus should be divided if Ashanti joins the partnership with a $60,000 investment. The partners new agreement will share profit and loss in a 1:3 ratio.
On February 3, 2016 Sam Singh invested $90,000 cash for a 1/3 interest in a newly formed partnership. Prepare the journal entry to record the transaction.
The partnership of Magda and Sue shares profits and losses in a 50:50 ratio after Mary receives a $7,000 salary and Sue receives a $6,500 salary. Prepare a schedule showing how the profit and loss should be divided, assuming the profit or loss for the year is: A. $10,000 B. $5,000 C. ($12,000) In addition, show the resulting entries to each partners capital account.
19. Following is the balance sheet of the WXYZ Partnership at March 31, 2021, when the partnership isto be liquidated: Cash – P6,000; Other Assets – P126,000; Liabilities – P12,400; W, Loan – P12,000; X, Loan– P14,400; Z, Loan – P9,600; W, Capital (25%) – P16,200; X, Capital (25%) – P12,000; Y, Capital (25%)– P37,700; Z, Capital (25%) – P17,700. During the month of April 2021, assets having book value ofP18,000 are sold at a loss of P2,400. Liquidation expenses of P600 are paid as well as P7,200 of theliabilities. Of the liabilities shown in the balance sheet, P240 represents salary payable to Z and P160represents salary payable to Y. On April 30, 2021, how much cash will be distributed to the partners? a. W – 0; X – 0; Y – 0; Z – P9,000b. W – P1,950; X – P1,950; Y – P1,950; Z – P1,950c. W – 0; X – 0; Y – 0; Z – P1,950d. W – 0; X – 0; Y – P9,000; Z – 0