Activity 5. Sole Proprietor Form a Partnership

Amos and Anah agreed to convert their respective sole proprietorship into a partnership. They agreed that their respective individual assets and liabilities are to be recorded at their book value. They will contribute additional cash to bring their capital balance to 40% for Amos and 60% for Anah from the total agreed capitalization of P250, 000. Their sole proprietorship's balance sheets before the partnership formation are as follows:

Amos Anah WWwWw Cash P 5,000 P 10,000 Accounts receivable 95,000 100,000 Equipment 180,000 200,000 Accounts payable 150,000 250,000 Notes payable 50.000