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    Jedah Noel - ASSIGNMENT 1 - Partnership Formation

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    Jeddieh Noel
    L. Medina owns a retail business and wants to expand by forming a partnership with L. Loqueloque. Medina's balance sheet shows assets of $4.4 million and capital of $3.77 million. They agree to adjustments including writing down receivables and inventory. Loqueloque will contribute cash to equalize their capital balances. The partnership will record the assets and capital contributions of both partners. G. Geron and Y. Yumol own separate businesses and agree to form a partnership. Their individual balance sheets total over $2.3 million in assets. Adjustments include writing off uncollectible receivables and worthless inventory items. The partnership will record the adjusted assets and capital

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    Jedah Noel - ASSIGNMENT 1 - Partnership Formation

    Uploaded by

    Jeddieh Noel
    422 views2 pages
    L. Medina owns a retail business and wants to expand by forming a partnership with L. Loqueloque. Medina's balance sheet shows assets of $4.4 million and capital of $3.77 million. They agree to adjustments including writing down receivables and inventory. Loqueloque will contribute cash to equalize their capital balances. The partnership will record the assets and capital contributions of both partners. G. Geron and Y. Yumol own separate businesses and agree to form a partnership. Their individual balance sheets total over $2.3 million in assets. Adjustments include writing off uncollectible receivables and worthless inventory items. The partnership will record the adjusted assets and capital

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    L. Medina owns a retail business and wants to expand by forming a partnership with L. Loqueloque. Medina's balance sheet shows assets of $4.4 million and capital of $3.77 million. They agree to adjustments including writing down receivables and inventory. Loqueloque will contribute cash to equalize their capital balances. The partnership will record the assets and capital contributions of both partners. G. Geron and Y. Yumol own separate businesses and agree to form a partnership. Their individual balance sheets total over $2.3 million in assets. Adjustments include writing off uncollectible receivables and worthless inventory items. The partnership will record the adjusted assets and capital

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    422 views2 pages

    Jedah Noel - ASSIGNMENT 1 - Partnership Formation

    Uploaded by

    Jeddieh Noel
    L. Medina owns a retail business and wants to expand by forming a partnership with L. Loqueloque. Medina's balance sheet shows assets of $4.4 million and capital of $3.77 million. They agree to adjustments including writing down receivables and inventory. Loqueloque will contribute cash to equalize their capital balances. The partnership will record the assets and capital contributions of both partners. G. Geron and Y. Yumol own separate businesses and agree to form a partnership. Their individual balance sheets total over $2.3 million in assets. Adjustments include writing off uncollectible receivables and worthless inventory items. The partnership will record the adjusted assets and capital

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    ASSIGNMENT 1: PARTNERSHIP FORMATION

    A. Leopoldo Medina owns a chain of merchandising retail business in Davao City. Due to
    his plan of expanding his business, he invites Lenore Loqueloque whom he believed
    could be trusted and could provide the necessary capital build-up.
    His post-closing trial balance as of December 31, 20A appeared as follows:

    Debit Credit
    Cash P 1,050,000
    Accounts Receivable 65,000
    Allowance for Doubtful Accounts P 5,000
    Merchandise Inventory 2,350,000
    Store Equipment 950,000
    Accumulated Depreciation 190,000
    Accounts Payable 450,000
    L. Medina, Capital ___________ 3,770,000
    Total P 4,415,000 P4,415,000

    They agreed the following:


    a. The Accounts Receivable has 85% probability of collection.
    b. Merchandise Inventory should have a net realizable value of P2,325,000.
    c. The Store Equipment has a fair market value of P850,000.
    d. Accrued Rental of P60,000 and Prepaid Expenses of P25,000 should be recognized.
    e. L. Loqueloque will contribute cash to make her capital balance equal to Medina.

    Required:
    1. Journal entries to adjust the book of Medina to conform with what has been
    agreed upon.
    2. Determine the adjusted capital balance of Medina.
    3. Determine the amount of cash that Loqueloque will contribute to the
    partnership.
    4. Close the sole proprietorship book of Medina.
    5. Record the contribution of both Medina and Loqueloque in the new set of
    partnership book.
    6. Statement of Financial Position after the formation of the partnership.

    B. The business assets of Geron and Yumol appear below:

    Geron Yumol
    Cash P 11,000 P 22,354
    Accounts Receivable 234,536 567,890
    Inventories 120,035 260,102
    Land 603,000 -
    Building - 428,267
    Furniture and Fixtures 50,345 34,789
    Other Assets 2,000 3,600
    Total P1,020,916 P1,317,002

    Accounts Payable P 178,940 P 243,650


    Notes Payable 200,000 345,000
    Geron, Capital 641,976 -
    Yumol, Capital _____-____ 728,352
    Total P 1,020,916 P 1,317,002
    Geron and Yumol agreed to form a partnership contributing their assets and equities
    subject to the following adjustments:
    a. Accounts Receivable of P20,000 in Geron’s books and P35,000 in Yumol’s are
    uncollectible.
    b. Inventories of P5,500 and P6,700 are worthless in Geron’s and Yumol’s respective
    books.
    c. Other assets of P2,000 for Geron and P3,600 for Yumol are to be written off.

    Required:
    1. Journal entries to adjust the book of Geron and Yumol to conform with what has been
    agreed upon.
    2. Determine the adjusted capital balance of Geron and Yumol.
    3. Close the sole proprietorship books of Geron and Yumol.
    4. Record the contribution of both Geron and Yumol in the new set of partnership book.
    5. Statement of Financial Position after the formation of the partnership.

    -o0o-

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