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Accounting

Loren and Jamby formed a partnership on July 1, 2019. After adjusting assets and liabilities per their agreements, total partnership assets were calculated. The adjustments included allowances for doubtful accounts, depreciation adjustments, accrual recognition, inventory write-off, and agreement to share profits and losses equally.

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Alexandra Nicole Isaac
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716 views1 page

Accounting

Loren and Jamby formed a partnership on July 1, 2019. After adjusting assets and liabilities per their agreements, total partnership assets were calculated. The adjustments included allowances for doubtful accounts, depreciation adjustments, accrual recognition, inventory write-off, and agreement to share profits and losses equally.

Uploaded by

Alexandra Nicole Isaac
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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 Loren and Jamby decide to combine their businesses and form a partnership on July 01, 2019.

The following are


their assets and liabilities on July 01, 2019 before formation:
Loren Jamby
Assets P210,750 P103,000
Liabilities 91,500 36,000

The following agreements are made to adjust assets and liabilities:


a. Both partners will provide P5,000 allowance for doubtful accounts
b. Loren’s fixed assets were over-depreciated by P1,000 and Jamby’s fixed assets were under-depreciated by P500.
c. Accrued expenses are to be recognized in the books of Loren and Jamby in the amount of P1,200 and P1,000,
respectively.
d. Obsolete inventory to be written off by Loren amounts to P3,500.
e. Loren and Jamby also agreed to share profits and losses equally.

What is the total asset of the partnership after the formation?

 Garnett and Bryant decided to combine their businesses and form a partnership. Below are their statements of
financial position before the formation:

Garnett Bryant
Cash P2,048,400 P1,098,360
Accounts Receivable 1,031,960 2,498,716
Inventories 528,160 1,144,448
Property and Equipment- net 613,380 852,224
Other Assets 8,800 15,840

Total Assets P4,230,700 P5,609,588

Accounts Payable P787,336 P1,072,060


Notes Payable 1,000,000 -
Mortgage Payable - 1,440,000
Garnett, capital 2,443,364
Bryant, Capital 3,097,528
P4,230,700 P5,609,588

The partners agreed that the property and equipment of Garnett is underdepreciated by P80,000 and that of Bryant is
over-depreciated by P200,000. Accounts Receivable of P108,000 in Garnett’s book and P140,000 in Bryant’s book are
uncollectible. The partnership decided to assume the mortgage liability of Bryant. The partnership’s agreement provides
for a profit and loss ratio and capital interest of 60% to Garnett and 40% to Bryant. Bryant is willing to invest or
withdraw cash from the partnership to comply with the agreement.

What are the capital balances of Garnett and Bryant after the formation?

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