Both agreed for the adjustment of the following asset values:

Robo's business:

1. Bad accounts of P3,000 are to be written off. A 4% allowance for doubtful accounts is to be recognized on the

remaining accounts receivable after write off.

2. Merchandise inventory's present market value is P70,800.

3. Furnitures and Fixtures account should be adjusted to replacement value of P45,000. After adjustment to

replacement value, the asset should be considered as 50% depreciated.

Kap's business:

1. Only 10% allowance for doubtful accounts is to be recognized on the outstanding accounts receivable as of June

30, 2014.

2. The office equipment should be depreciated further by 8%.

3. The fair market value of the merchandise is P46,450.

Required:

Robo and Kap agreed to use a new set of books for their partnership

1. Record the capital adjusting entries in both books.

2. Prepare the adjusted Trial Balance in both books.

3. Close Robo's and Kap's books.

4. Record the investments of both partners in the new books.

5. Prepare the starting balance sheet of the "Robo-Kap Trading.

Activity - Partnership between Two or More Existing Sole Proprietorship. Assume that Robo and Kap agreed to combine their business and will call their new partnership as "Robo-Kap Trading." The partnership will use a new book. Just before the partnership formation, the financial positions of Robo's and Kap's business are as follows: Robo Statement of Financial Position June 30,2014 Assets Current Assets Cash 48,600 Accounts Receivable 60,000 Allowance for Doubtful Accounts 3.600 56,400 Merchandise Inventory 64,200 Supplies Inventory 4,800 Total Current Assets 174,000 Property and Equipment Furniture and Fixtures 36,000 Less: Accumulated Depreciation 16,800 19,200 Total Assets 193,200 Liabilities and Capital Current Liabilities Accounts Payable 24,800 Notes Payable 48,000 72,000 Total Current Liabilities Capital Robo, Capital 121,200 Total Liabilities and Capital 193,200Kap Statement of Financial Position June 30, 2014 Assets Current Assets Cash 13,400 Accounts Receivable 24,000 Allowance for doubtful accounts 2,700 21,300 Merchandise Inventory 60,500 Total Current Assets 95,200 Property and Equipment Office Equipment 40,500 Less: Accumulated Depreciation 7,500 33,000 Total Assets 128,000 Liabilities and Owner's Equity Current Liabilities Accounts Payable 25,000 Notes Payable 15,000 Total Current Liabilities 40,000 Capital Kap, Capital 88,200 Total Liabilities and Capital 128,200