The following are selected transactions of BSAIS Company, an accounting firm: June 1 Andy Alarcon invested P200,000 cash to establish the business of which P150,000 was deposited to its UnionBank current account. June 2 He also invested a computer acquired a few months ago at a cost of P55,000 but there is still an outstanding liability of P25,000 due to ACER Electronic Equipment. This liability is to be assumed by the business. June 5 He also invested furniture and fixtures which were acquired a year ago for P20,000 but with a current market value of P10,000. Dec. 8 Withdrew a piece of furniture which was invested last June 5 and listed in the books as P2,500. It has an accumulated depreciation of P250. Required: Prepare the entries to record the above transactions.
1. The following are selected transactions of BSAIS Company, an accounting firm:
June 1 Andy Alarcon invested P200,000 cash to establish the business of which P150,000 was deposited to its UnionBank current account.
June 2 He also invested a computer acquired a few months ago at a cost of P55,000 but there is still an outstanding liability of P25,000 due to ACER Electronic Equipment. This liability is to be assumed by the business.
June 5 He also invested furniture and fixtures which were acquired a year ago for P20,000 but with a current market value of P10,000.
Dec. 8 Withdrew a piece of furniture which was invested last June 5 and listed in the books as P2,500. It has an
Required: Prepare the entries to record the above transactions.
2. Lileth Adriano, who plans to go abroad, is selling her mini-donut business. Her friend, Benita Solido is interested to buy it but can only afford to pay P350,000. The following are the assets of Adriano’s business:
| Book Value | Market Value | |
|
Equipment (net of accumulated |
P350,000 | P300,000 |
| Furniture and Fixtures (net of accumulated depreciation of P5,000) |
75,000 | 50,000 |
| Raw Materials | 35,000 | 25,000 |
| Franchise Right | 150,000 | 100,000 |
| Total | P610,000 | P475,000 |
a. How much is the net worth assuming there is a mortgage note of P150,000 attached to
the equipment?
b. Will Benita Solido be able to afford to buy the business?
c. Make the entry in the books of Benita.
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