Problem #4 Admission by Investment of Assets Resulta and Magpantay are partners sharing profits on a 60:40 ratio. A statement of financial position prepared for the partners on April 1, 2019 follows: Cash P 480,000 920,000 1,650,000 Accounts Payable P 890,000 1,330,000 1,080,000 Accounts Receivable Resulta, Capital Inventories Magpantay, Capital Equipment Less: Accumulated P700,000 Depreciation Total Assets 450,000 250,000 P3,300,000 Total Liabilities & Capital P3,300,000 On this date, the partners agreed to admit Tria as a partner. The terms of the agreement are summarized below: Assets and liabilities are to be restated as follows: { a. An allowance for possible uncollectibles of P45,000 is to be established. b. Inventories are to be restated at their present replacement value of P1,700,000. C. Accrued expenses of P40,000 are to be recognized. Resulta, Magpantay and Tria will divide profits in the ratio of 5:3:2. Capital balances of the partners after the formation of the new partnership are to be in the stated ratio, with Resulta and Magpantay making cash settlement between themselves outside of the partnership to adjust their capitals, and Tria investing cash in the partnership for his interest. Determine how much cash is to be invested by Tria.
Problem #4 Admission by Investment of Assets Resulta and Magpantay are partners sharing profits on a 60:40 ratio. A statement of financial position prepared for the partners on April 1, 2019 follows: Cash P 480,000 920,000 1,650,000 Accounts Payable P 890,000 1,330,000 1,080,000 Accounts Receivable Resulta, Capital Inventories Magpantay, Capital Equipment Less: Accumulated P700,000 Depreciation Total Assets 450,000 250,000 P3,300,000 Total Liabilities & Capital P3,300,000 On this date, the partners agreed to admit Tria as a partner. The terms of the agreement are summarized below: Assets and liabilities are to be restated as follows: { a. An allowance for possible uncollectibles of P45,000 is to be established. b. Inventories are to be restated at their present replacement value of P1,700,000. C. Accrued expenses of P40,000 are to be recognized. Resulta, Magpantay and Tria will divide profits in the ratio of 5:3:2. Capital balances of the partners after the formation of the new partnership are to be in the stated ratio, with Resulta and Magpantay making cash settlement between themselves outside of the partnership to adjust their capitals, and Tria investing cash in the partnership for his interest. Determine how much cash is to be invested by Tria.
Accounting
27th Edition
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Chapter12: Accounting For Partnerships And Limited Liability Companies
Section: Chapter Questions
Problem 12.14EX
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Concept explainers
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is 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, drawings of a partner, etc.
Question
Transcribed Image Text:Problem #4
Admission by Investment of Assets
Resulta and Magpantay are partners sharing profits on a 60:40 ratio. A statement of
financial position prepared for the partners on April 1, 2019 follows:
Cash
P 480,000
Accounts Payable
P 890,000
1,330,000
Accounts Receivable
920,000
1,650,000
Resulta, Capital
Inventories
Magpantay, Capital
1,080,000
Equipment
P700,000
Less: Accumulated
Depreciation
450,000
250,000
P3,300,000
Total Assets
Total Liabilities & Capital
P3,300,000
On this date, the partners agreed to admit Tria as a partner. The terms of the
agreement are summarized below:
Assets and liabilities are to be restated as follows:
a. An allowance for possible uncollectibles of P45,000 is to be established.
b. Inventories are to be restated at their present replacement value of P1,700,000.
C. Accrued expenses of P40,000 are to be recognized.
Resulta, Magpantay and Tria will divide profits in the ratio of 5:3:2. Capital balances of
the partners after the formation of the new partnership are to be in the stated ratio,
with Resulta and Magpantay making cash settlement between themselves outside of
the partnership to adjust their capitals, and Tria investing cash in the partnership for his
interest. Determine how much cash is to be invested by Tria.
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