Answered: repare the opening journal entry in the…

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter18: Comparative Forms Of Doing Business

Section: Chapter Questions

Problem 38P

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Question

Caluguas and Dela Cruz formed a partnership and invested the following assets and liabilities:

Fair Market Value Carrying Value

Calaguas:

Cash P300,000 P300,000

Land 450,000 280,000

Dela Cruz:

Cash 100,000 100,000

Building 600,000 520,000

Mortgage Payable (400,000) (400,000)

The partners will share profits and losses equally.

Required:

Prepare the opening journal entry in the books of the partnership.

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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