Asuncion agrees to invest cash for a one-third interest in the firm.

Instructions: 1. Prepare the entries to record the investments of Aquino and Asuncion in the partnership's new set of books. 2. Prepare the entries to adjust and close the balances of accounts in the books of Aquino.

Exercise 1 (Cash and Net Asset Contribution) Aquino and Asuncion have decided to form a partnership. Aquino invests the assets presented below at their agreed valuation. and also transfers his liabilities to the new rm. Ledger Balances Agreed Valuation Cash P450. 000 P 450.000 Accounts Receivable 180. 000 180. 000 Allowance for Uncollectibie Accounts 1 5,000 10. 000 Merchandise Inventory 300. 000 270. 000 Equipment 130.000 125.000 Accumulated Depreciation 30,000 -- Accounts Payable 1 05,000 1 05,000 Notes Payable 90.000 90.000