Problem I Ariel, Beauty and Cindy decided to form Disprin Partnership with 2:2:1 profit sharing. Both Ariel and Beauty have existing business. The balance sheet of the two are shown below together with their agreement prior to formation. Ariel Beauty Cash 113 126 Accounts Receivables 200 100 Inventories 50 50 Equipment 80 0 Furniture 0 30 Prepayments 5 15 TOTAL 448 321 Accounts Payable 75 95 Capital 373 226 TOTAL 448 321 Partners' agreements: Receivables are 97% collectible Ariel's inventories fair values is at P49 while P20 of Beauty's Inventories were damaged and are only 30% recoverable. The equipment is overdepreciated by P5 and the furniture's value will decrease by P4. P3 of Ariel’s prepayments were already exhausted while Beauty has unrecorded liability of P3. Cindy will contribute sufficient cash to give her 20% interest. 1. How much capital will be credited to Ariel? 2. How much capital will be credited to Beauty? 3. How much capital will be credited to Cindy?
Problem I
Ariel, Beauty and Cindy decided to form Disprin Partnership with 2:2:1 profit sharing. Both Ariel and Beauty have existing business. The balance sheet of the two are shown below together with their agreement prior to formation.
Ariel Beauty
Cash 113 126
Inventories 50 50
Equipment 80 0
Furniture 0 30
Prepayments 5 15
TOTAL 448 321
Accounts Payable 75 95
Capital 373 226
TOTAL 448 321
Partners' agreements:
Receivables are 97% collectible
Ariel's inventories fair values is at P49 while P20 of Beauty's Inventories were damaged and are only 30% recoverable.
The equipment is overdepreciated by P5 and the furniture's value will decrease by P4.
P3 of Ariel’s prepayments were already exhausted while Beauty has unrecorded liability of P3.
Cindy will contribute sufficient cash to give her 20% interest.
1. How much capital will be credited to Ariel?
2. How much capital will be credited to Beauty?
3. How much capital will be credited to Cindy?
4. How much is the total assets of the newly-formed partnership?
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