Exercise 2-8. Computing Partners' Capital Investment Martin and Jude were longtime friends. When the two met during one of their college reunions, Martin invited Jude to form a business partnership with him. Martin narrated to his friend how he started his small business on January 2, 2018. The business according to him after these 2 years is doing well. On January 1, 2020, Jude accepted his friend's invitation to be his partner on his online product delivery services. Martin will be investing the assets and liabilities of his sole proprietorship business into the partnership. The following is Martin Online Delivery Services post-closing balance as of December 31, 2019. Jude will be investing a brand-new computer worth P50,000 and sufficient cash that will give him a 40% capital credit in the partnership after considering the following adjustments to the assets that the existing business of Martin will be investing into the partnership venture. a. It is estimated that 10% of the receivables may not be collectible. b. Martin did not record any depreciation for the delivery equipment, office equipment, and furniture and fixture since acquiring them in January 1, 2018. The two friends agreed on the following computation: - Delivery equipment and office equipment may be sold again after the assets' estimated useful life of 7 years at 10% of its actual cost. - the furniture and fixture should have been depreciated over an estimated useful life of ten years without any salvage value Compute the following: 1. How much is the capital of Martin in the newly formed partnership? 2. How much is the capital of Jude in the newly formed partnership? 3. How much is the amount of cash to be invested by Jude? Exercise 2-8. Computing Partners' Capital Investment Martin and Jude were longtime friends. When the two met during one of their college reunions, Martin invited Jude to form a business partnership with him. Martin narrated to his friend how he started his small business on January 2, 2018. The business according to him after these 2 years is doing well. On January 1, 2020, Jude accepted his friend's invitation to be his partner on his online product delivery services. Martin will be investing the assets and liabilities of his sole proprietorship business into the partnership. The following is Martin Online Delivery Services post-closing balance as of December 31, 2019. Jude will be investing a brand-new computer worth P50,000 and sufficient cash that will give him a 40% capital credit in the partnership after considering the following adjustments to the assets that the existing business of Martin will be investing into the partnership venture. a. It is estimated that 10% of the receivables may not be collectible. b. Martin did not record any depreciation for the delivery equipment, office equipment, and furniture and fixture since acquiring them in January 1, 2018. The two friends agreed on the following computation: - Delivery equipment and office equipment may be sold again after the assets' estimated useful life of 7 years at 10% of its actual cost. - the furniture and fixture should have been depreciated over an estimated useful life of ten years without any salvage value Compute the following: 1. How much is the capital of Martin in the newly formed partnership? 2. How much is the capital of Jude in the newly formed partnership? 3. How much is the amount of cash to be invested by Jude
