1. prepare journal entries in the new partnership book to record investment of Piolo and Jericho

2. prepare statement of financial position of of Picho novelty shop.

Problem: Piolo Pascual and Jericho Rosales, sole proprietors, operate a novelty shop one in Manila and another in Quezon City. On December, 2018, Piolo invited Jericho to form Picho Novelty Shop. The following are their statements of financial position as at January 01, 2019: Assets Cash Accounts receivable Merchandise inventory Furniture Total Piolo Novelty Shop Statement of Financial Position January 01, 2019 Liabilities and Equity 13,000 Accounts payable 10,000 Piolo, Capital 20,000 5.000 48,000 12,500 35,500 48,000 Jericho Novelty Shop Statement of Financial Position January 01, 2019 Assets Liabilities and Equity Cash 15,000 Accounts payable 15,000 Accounts receivable 40,000 Notes payable 20,000 Allowance for bad debts 6.000) 36,000 Jericho, Capital 79,500 Merchandise inventory 50,000 Furniture 15,000 Ace Depreciation 1.500) 13,500 Total 114500 114, 500 The following were agreed upon by Piolo and Jericho: 1. Piolo will invest his business subject to the following conditions: a That P2,000 of the accounts receivable will not be collected. b. The furniture be adjusted to its fair market value of P4,000 c. Additional accounts payable of P2,500 to be recognized. 2. Jericho's net contribution should be adjusted subject to the following: a. The allowance for bad debts is estimated at 15% b. Furniture should have a net book value of P12,000