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Parcor 5

The partnership formation of ABC and XYZ resulted in total assets of $212,000 and total capital of $155,000. ABC's capital was $62,000 and XYZ's capital was $93,000. To determine the capital balances, adjustments were made to ABC and XYZ's accounts for inventory, receivables, accrued salaries, supplies, patent and rent. ABC contributed additional cash of $15,000 to obtain a 40% interest in the new partnership.

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Shara Mae Samelo
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95 views1 page

Parcor 5

The partnership formation of ABC and XYZ resulted in total assets of $212,000 and total capital of $155,000. ABC's capital was $62,000 and XYZ's capital was $93,000. To determine the capital balances, adjustments were made to ABC and XYZ's accounts for inventory, receivables, accrued salaries, supplies, patent and rent. ABC contributed additional cash of $15,000 to obtain a 40% interest in the new partnership.

Uploaded by

Shara Mae Samelo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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PROBLEM SETS: PARTNERSHIP FORMATION 3.

The capital balances of ABC and XYZ in the combined balance sheet:
a. ABC, Php 81,250; XYZ, Php 72,000
On July 1, 2019, ABC and XYZ decided to form a partnership. The firm is to take over business assets and assume
b. ABC, Php 81,250; XYZ, Php 75,000
liabilities, and capitals are to be based on net assets transferred after the following adjustments:
c. ABC, Php 100,000; XYZ, Php 75,000
a) ABC and XYZ’s inventory is to be valid at Php 31,000 and Php 22,000 respectively d. ABC, Php 62,000; XYZ, Php 93,000
b) Accounts receivable of Php 2,000 in ABC’s book and Php 1,000 in XYZ’s books are uncollectible
c) Accrued salaries of Php 4,000.00 for ABC and Php 5,000 for XYZ are still to be recognized in the books
d) Unused office supplies of ABC amounted to Php 5,000 while that of XYZ amounted to Php 1,500.00
e) Unrecorded patent of Php 7,000.00 and prepaid rent of Php 4,500.00 are to be recognized in the books
of ABC and XYZ respectively
f) ABC is to invest or withdrew cash necessary to have a 40% interest in the firm

Balance sheets for ABC and XYZ on July 1 before adjustments are given below: (in pesos)

Accounts ABC XYZ


Cash 31,000.00 50,000.00
Accounts receivable 26,000.00 20,000.00
Inventory 32,000.00 24,000.00
Office supplies 5,000.00
Equipment 20,000.00 24,000.00
Accumulated depreciation (9,000.00) (3,000.00)
Total Assets 100,000.00 120,000.00

Accounts payable 28,000.00 20,000.00


Capitals 72,000.00 100,000.00

Total Liabilities and Capital 100,000.00 120,000.00

Determine:

1. The total assets of the partnership after formation


a. Php 235,333.50
b. Php 230,000.00
c. Php 220,333.50
d. Php 212,000.00

2. The total capital of the partnership after formation:


a. Php 180,000.00
b. Php 178,333.50
c. Php 163,333.50
d. Php 155,000.00

SOLUTIONS:

Old books of ABC - ADJUSTMENTS ABC XYZ PARTNERSHIP


STATEMENT OF FINANCIAL POSITION
a) ABC, capital 1,000
JULY 1, 2019
Inventory 1,000
ASSETS LIABILITIES AND EQUITY
Cash 66,000 Accounts payable 48,000
Accounts receivable 46,000 Accrued salaries 9,000
b) ABC, capital 2,000
Allowance for bad debts ( 3,000) 43,000 ABC, capital 62,000
Allowance for bad debts 2,000 Inventory 53,000 XYZ, capital 93,000
Office Supplies 6,500
c) ABC, capital 4,000 Prepaid Rent 4,500
Accrued salaries 4,000 Equipment 32,000
Patent 7,000
TOTAL ASSETS 212,000 TOTAL LIABILITIES & EQUITY 212,000
d) Office supplies 5,000
ABC, capita 5,000

e) Patent 7,000
ABC, capital 7,000

f) ABC, capital 15,000


Cash 15,000

Old books of XYZ – ADJUSTMENTS

a) XYZ, capital 2,000


Inventory 2,000

b) XYZ, capital 1,000


Allowance for bad debts 1,000

c) XYZ, capital 5,000


Accrued salaries 5,000

d) XYZ, capital 1,000


Office supplies 3,500

e) Prepaid rent 4,500


XYZ, capital 4,500

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