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Accounting for Partnership (70 points) The partnership of Red and White admits Blue as a partner on January 1, 20CY. The partnership has the following

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Accounting for Partnership (70 points) The partnership of Red and White admits Blue as a partner on January 1, 20CY. The partnership has the following balances on December 31, 20PY: Red and White Partnership Balance Sheet December 31, 20PY Assets Liabilities and Owner's Equity Cash P 450,000 Accounts Payable P 2,500,000 Other Assets 5,500,000 Red, Capital 2,250,000 White, Capital 1.200,000 Total Assets P 5,950,000 Total Liabilities and Owner's Equity P 5 950 000 Profits and losses for Red is 60% and 40% for White, respectively. Requirements: 1. Suppose Blue pays White P1,500,000 to buy out White. Red approves Blue as a partner. a. Record the transfer of equity on the partnership books on January 1, 20CY. (2 points: 1 point for each correct account and amount used) b. Prepare the partnership balance sheet immediately after Blue is admitted as a partner. (25 points) 2. Suppose Blue becomes a partner by investing P1,550,000 cash on January 1, 20CY to acquire a 1/4 interest in the business. a. Compute Blue's capital balance and determine whether there's any bonus. If so, who gets the bonus? (5 points) b. Journalize Blue's investment in the business. (4 points: 1 point for each correct account and amount used) C. Prepare the partnership balance sheet immediately after Blue is admitted as a partner. Include the heading. (25 points) 3. Assume that Red and White partnership liquidates by selling its other assets for P5,000,000. Prepare the entries to liquidate the partnership on January 1, 20CY. (9 points: 1 point for each correct account and amount used)Partnership Liquidation (31 points] The Braun Company at December 31 has cash P750,000, non-cash assets P5,500,000, liabilities P3,000,000, and the following capital balances: Ho P2,000,000 and Li P1,250,000. The firm is liquidated, and P4,500,000 in cash is received for the non-cash assets. Ho's and Li's income ratios are 60% and 40%, respectively. Requirements: 1. Prepare a cash distribution schedule. (20 points: 1 point for each correct amount used in the cash distribution schedule) 2. Prepare the entries to record the following, assuming that The Braun Company decides to liquidate the company. a. The sale of non-cash assets (3 points: 1 point for each correct amount and account used) b. The allocation of the gain or loss on liquidation to the partners (3 points: 1 point for each correct amount and account used) c. Payment of creditors (2 points: 1 point for each correct amount and account used) d. Distribution of cash to the partners (3 points: 1 point for each correct amount and accountused) Reference: Weygandt, J. J., Kimmel, P. D., & Kiesa, D. E. (2015). Accounting principles (12thed.). United States of America: John Wiley & Sons, Inc

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