PLEASE ANSWER ASAP
Instructions: Prepare the entries to record the partnership formation assuming
1. The books of Abante are to be used by the partnership.
2. New set of books are to be opened for the partnership.
Transcribed Image Text:0,000
0,000
500)
2,000
200
200
00
Problem 2-4 (Cash, Non-cash and Net Assets Contributions; Books of the Sole
Proprietor to be Used by the Partnership)
On January 1, 2014, Abante, Arevalo, and Almonte decided to form a partnership. Abante,
a sole proprietor, will transfer to the partnership his net assets, excluding cash. Arevalo
will contribute cash in an amount equal to one and a half times the investment of Abante.
Almonte will contribute a piece of land with an agreed value of P1,800,000 subject to a
mortgage of P300,000 to be assumed by the partnership. The statement of financial
position of Abante is as shown on the next page.
Transcribed Image Text:1.
2.
Merchandise Inventory
Furniture and Equipment
Cash
Accounts Receivable
Less Allowance for Uncollectible Accounts
Abanic Coup
Statement of Financial Position
January 1, 2014
Less Accumulated Depreciation
Total Assets
Accounts Payable
Abante, Capital
Total Liabilities and Capital
Assets
P 840,000
90,000
P 1,050,000
210,000
Liabilities and Capital
P
360,000
750,000
1,200,000
840,000
P 3,150,000
P
450,000
2,700,000
P 3,150,000
The Articles of Co-Partnership executed for the purpose calls for adjustments to the
assets, as follows:
a.
The allowance for uncollectible accounts should be increased by P150,000.
b. The inventories should be valued at P1,000,000 only.
Instructions: Prepare the entries to record the partnership formation assuming
The books of Abante are to be used by the partnership.
New set of books are to be opened for the partnership.
C. The furniture and equipment are underdepreciated by P240,000.
d. The new partnership is to credit Abante with a capital of P2,000,000. The excess
capital credit over the fair value of the net assets transferred is to be recognized as
goodwill.
T
P
a
I
Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement 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, and drawings of a partner.
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