Answered: is date approximate their fair values.…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter15: Contributed Capital

Section: Chapter Questions

Problem 1MC

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Read and understand the problem below. Write the answer on the space provided below. The capital accounts of X and Y Company before the admission of Z are as follows: Capital accounts P/L ratios X, Capital P100,000 30% Y, Capital 200,000 70% P300,000 Case 1 Z purchases 10% interest out of the 30% interest of A for P100, 000. The net assets of the firm as of this date approximate their fair values. Provide the journal entry to record the transaction. Case 2 Z purchases 10% interest in the partnership by investing P70,000 cash to the business. The net assets of the firm as of this date approximate their fair values. Requirements: Provide the journal entry to record the admission of Z.(show your computation below) Compute for capital balances of the partners after the admission of Z. (show your computation below) Compute for the new P/L ratios of the partners.

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