On May 1, 2022, Carlo has been in a trading business for five years as a sole proprietor. He needed additional capital to fund business expansion so he decided to invite Jamie by investing cash for a one-third interest in the new partnership, CABLES Trading. CABLES Trading would assume the liabilities of Carlo's business. Jamie accepted the invitation and both agreed to revalue assets of Carlo's business as itemized: Accounts Receivable $50,000; Merchandise Inventory P28,000; Office Equipment $22,000; and Land $279,000. Account balances in the books of Carlo were as follows: Account Titles Debit Credit Cash P135,000 Accounts Receivable 60,000 Allowance for Doubtful Accounts P 4,000 Merchandise Inventory 25,000 Office Equipment 33,000 Accumulated Depreciation 15,000 Land 260,000 Accounts Payable 194,000 Carlo, Capital 300,000 How much is the capital of CABLES Trading upon formation?
On May 1, 2022, Carlo has been in a trading business for five years as a sole proprietor. He needed additional capital to fund business expansion so he decided to invite Jamie by investing cash for a one-third interest in the new partnership, CABLES Trading. CABLES Trading would assume the liabilities of Carlo's business. Jamie accepted the invitation and both agreed to revalue assets of Carlo's business as itemized: Accounts Receivable $50,000; Merchandise Inventory P28,000; Office Equipment $22,000; and Land $279,000. Account balances in the books of Carlo were as follows: Account Titles Debit Credit Cash P135,000 Accounts Receivable 60,000 Allowance for Doubtful Accounts P 4,000 Merchandise Inventory 25,000 Office Equipment 33,000 Accumulated Depreciation 15,000 Land 260,000 Accounts Payable 194,000 Carlo, Capital 300,000 How much is the capital of CABLES Trading upon formation?
Chapter13: Choice Of Business Entity—general Tax And Nontax Factors/formation
Section: Chapter Questions
Problem 51P
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Transcribed Image Text:On May 1, 2022, Carlo has been in a trading business for five years as a sole proprietor.
He needed additional capital to fund business expansion so he decided to invite Jamie by investing cash for a one-third interest in the
new partnership, CABLES Trading.
CABLES Trading would assume the liabilities of Carlo's business.
Jamie accepted the invitation and both agreed to revalue assets of Carlo's business as itemized: Accounts Receivable $50,000;
Merchandise Inventory $28,000; Office Equipment $22,000; and Land $279,000.
Account balances in the books of Carlo were as follows:
Account Titles
Debit
Credit
Cash
P135,000
Accounts Receivable
60,000
Allowance for Doubtful Accounts
P 4,000
Merchandise Inventory
25,000
Office Equipment
33,000
Accumulated Depreciation
15,000
Land
260,000
Accounts Payable
194,000
Carlo, Capital
300,000
How much is the capital of CABLES Trading upon formation?
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