Problem #2 (Adapted) In a high school reunion, Tres met former classmate Uno and Dos. He learned that the two partners in a business of buying and selling general merchandise. While the business is profitable, it encounters occasional cash shortages due to growing investments in inventories and receivables. Tres was then invited to join the partnership of Uno and Dos by making a cash investment. At the time of his entry, the capital balances of Uno and Dos amounted to P40,000 and P200,000, respectively. They share profit and loss in the ratio of 6:4. Required: A. Prepare the journal entry to record the admission of Tres assuming: 1. He invested P300,000 for 1/3 interest in the partnership. 2. He invested P200,000 for a 20% interest in the partnership. 3. He invested P400,000 for a 50% interest in the partnership.

Problem #2 (Adapted) In a high school reunion, Tres met former classmate Uno and Dos. He learned that the two partners in a business of buying and selling general merchandise. While the business is profitable, it encounters occasional cash shortages due to growing investments in inventories and receivables. Tres was then invited to join the partnership of Uno and Dos by making a cash investment. At the time of his entry, the capital balances of Uno and Dos amounted to P40,000 and P200,000, respectively. They share profit and loss in the ratio of 6:4. Required: A. Prepare the journal entry to record the admission of Tres assuming: 1. He invested P300,000 for 1/3 interest in the partnership. 2. He invested P200,000 for a 20% interest in the partnership. 3. He invested P400,000 for a 50% interest in the partnership.

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter2: Financial Statements And The Annual Report

Section: Chapter Questions

Problem 2.3DC: Analysis of Cash Flow for a Small Business Charles, a financial consultant, has been self-employed...

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Alyssa who is currently operating a machine shop is considering Dindin, an excellent employee, to be her partner. Unfortunately, Dindin could not afford to invest cash of P 500,000 which Alyssa needs to expand her business. As consultant, you asked Alyssa to answer some questions before giving an advice on whether Dindin should be taken in as partner. What is your present annual net income?                                                  P 450,000 Can you avail of a loan of P 500,000?                                                          Yes What bank and what is the interest rate?                                                  Land Bank @ 17% With the new equipment, how much additional income will it generate?          P 450,000 In how many year are you going to pay the loan?                                     5 years How much are you willing to pay Dindin as salary or profit?                    P 160,000 You drafted the following information and filed it up: Net income…
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