On Nov. 8, 2021, Cadag who has her own retail business and Napay, decided to form a partnership wherein they will all divide profits in the ratio of 40:60, respectively. The statement of financial position of Cadag is as follows: Cadag Marketing Statement of Financial Position November 8, 2021 ASSETS Cash P4, 000.00 Accounts Receivable Less: ADA P160, 000.00 16, 000.00 144, 000.00 200, 000.00 Inventory Equipment Less: Accumulated Depreciation Total Assets 50, 000.00 10, 000.00 40, 000.00 P388, 000.00 Liabilities and Capital Accounts Payable Cadag, Capital Total Liabilities and Capital 36, 000.00 352, 000.00 P388, 000.00 Conditions agreed upon before the formation of the partnership: a. The accounts receivable of Cadag is estimated to be 70% realizable. b. The Accumulated Depreciation of the equipment will be increase by P10, 000.00 c. The accounts payable will be assumed by the partnership. d. The capital of the partnership is based on the adjusted capital balance of Cadag. Napay is to contribute cash in order to make the partner's capital balances proportionate to the P/L ratio. Required: 1. Prepare the journal entries for the formation of the partnership. 2. Prepare schedule or computation that will support your answer.
On Nov. 8, 2021, Cadag who has her own retail business and Napay, decided to form a partnership wherein they will all divide profits in the ratio of 40:60, respectively. The statement of financial position of Cadag is as follows: Cadag Marketing Statement of Financial Position November 8, 2021 ASSETS Cash P4, 000.00 Accounts Receivable Less: ADA P160, 000.00 16, 000.00 144, 000.00 200, 000.00 Inventory Equipment Less: Accumulated Depreciation Total Assets 50, 000.00 10, 000.00 40, 000.00 P388, 000.00 Liabilities and Capital Accounts Payable Cadag, Capital Total Liabilities and Capital 36, 000.00 352, 000.00 P388, 000.00 Conditions agreed upon before the formation of the partnership: a. The accounts receivable of Cadag is estimated to be 70% realizable. b. The Accumulated Depreciation of the equipment will be increase by P10, 000.00 c. The accounts payable will be assumed by the partnership. d. The capital of the partnership is based on the adjusted capital balance of Cadag. Napay is to contribute cash in order to make the partner's capital balances proportionate to the P/L ratio. Required: 1. Prepare the journal entries for the formation of the partnership. 2. Prepare schedule or computation that will support your answer.
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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Transcribed Image Text:On Nov. 8, 2021, Cadag who has her own retail business and Napay, decided to
form a partnership wherein they will all divide profits in the ratio of 40:60, respectively.
The statement of financial position of Cadag is as follows:
Cadag Marketing
Statement of Financial Position
November 8, 2021
ASSETS
Cash
Accounts Receivable
Less: ADA
P4, 000.00
P160, 000.00
16, 000.00
144, 000.00
200, 000.00
Inventory
Equipment
Less: Accumulated Depreciation
Total Assets
50, 000.00
10, 000.00
40, 000.00
P388, 000.00
Liabilities and Capital
Accounts Payable
Cadag, Capital
Total Liabilities and Capital
36, 000.00
352, 000.00
P388, 000.00
Conditions agreed upon before the formation of the partnership:
a. The accounts receivable of Cadag is estimated to be 70% realizable.
b. The Accumulated Depreciation of the equipment will be increase by P10, 000.00
c. The accounts payable will be assumed by the partnership.
d. The capital of the partnership is based on the adjusted capital balance of Cadag.
Napay is to contribute cash in order to make the partner's capital balances
proportionate to the P/L ratio.
Required:
1. Prepare the journal entries for the formation of the partnership.
2. Prepare schedule or computation that will support your answer.
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