132 ACCOUNTING PARTNERSHIP AND CORPORATION Problem 3-25 P Formation (Comprehensive below The business assets of Timon and Pumba appears Cash Accounts receivable Allowance for bad debts Notes receivable P 11.000 234,000 23,400) 300,000 120,000 603,000 P 25,000 560,000 28,000 150,000 260,000 Land Building Accum. depreciation Building Furniture and Fixture Accum. depreciation Furniture & Fixture 420,000 ( 42.000) 34,000 1,700 50,000 2,500) Other assets Totals Accounts payable Notes payable Timon, Capital Pumba, Capital P 179,000 200,000 917.100 P 244,000 345,000 Totals Timon and Pumba agreed to form a partnership contributing their respective assets and equities subject to the following adjustments: a. The accounts receivable of Timon is believed to be 95% collectible while b. Unrecorded interest on the notes receivable of both Timon and Pumba, c. Unrecorded interest on the notes payable of both Timon and that of Pumba is 90% collectible. 10% for two months. Pumba, 12% for three months. d. Inventories of P5,500 and P6,700 are worthless in Timon's and Pumba's respective books. The building is overdepreciated by P10,000 while the furniture and fixture should be depreciated by P2,500 and Pl.700 more for Timon and Pumba, respectively e. assets of P2,000 and P3,600 in Timon's and Pumba's respective f. Other books are to be written off Required: 1. Adjusting entries on both 2. Entries books of Timon and Pumba. to record the investments made by Timon and Pumba in the partnership books using the bonus method. Partnership's statement of financial 3. position. 132 ACCOUNTING PARTNERSHIP AND CORPORATION Problem 3-25 P Formation (Comprehensive below The business assets of Timon and Pumba appears Cash Accounts receivable Allowance for bad debts Notes receivable P 11.000 234,000 23,400) 300,000 120,000 603,000 P 25,000 560,000 28,000 150,000 260,000 Land Building Accum. depreciation Building Furniture and Fixture Accum. depreciation Furniture & Fixture 420,000 ( 42.000) 34,000 1,700 50,000 2,500) Other assets Totals Accounts payable Notes payable Timon, Capital Pumba, Capital P 179,000 200,000 917.100 P 244,000 345,000 Totals Timon and Pumba agreed to form a partnership contributing their respective assets and equities subject to the following adjustments: a. The accounts receivable of Timon is believed to be 95% collectible while b. Unrecorded interest on the notes receivable of both Timon and Pumba, c. Unrecorded interest on the notes payable of both Timon and that of Pumba is 90% collectible. 10% for two months. Pumba, 12% for three months. d. Inventories of P5,500 and P6,700 are worthless in Timon's and Pumba's respective books. The building is overdepreciated by P10,000 while the furniture and fixture should be depreciated by P2,500 and Pl.700 more for Timon and Pumba, respectively e. assets of P2,000 and P3,600 in Timon's and Pumba's respective f. Other books are to be written off Required: 1. Adjusting entries on both 2. Entries books of Timon and Pumba. to record the investments made by Timon and Pumba in the partnership books using the bonus method. Partnership's statement of financial 3. position