Gloria Detoya and Esterlina Gevera have operated a successful partnership for many years, sharing profit and losses equally. Evangelina Madelo is to be admitted to the partnership on June 1 of the current year, in accordance with the following agreement:

a. Assets and liabilities of the old pertnership are to be valued at their book values as of May 31, except for the following:

• Accounts receivable amounting to P 20,000 are to be written off, and the allowance for uncollectible accounts is to be increased to 5% of the reamaining accounts.
• Merchandise inventory is to be valued at P 638,700
• Equipment is to be valued at P 900,000.

b. Madelo is to purchase P 300,000 of the ownership interest of Gevera for P 375,000 cash and to contribute P 350,000 cash to the partnership for a total ownership equity of P 650,000.

c. The income-sharing ratio of Detoya, Gevera, and Madelo is to be 2:1:1

The post-closing trial balance of Detoya and Gevera as of May 31 follows:

Detoya and Gevera

Post-Closing Trial Balance

May 31, 2018

Debit Credit

Cash 95,000

Accounts Receivable 214,000

Allowance for Uncollectible Accounts 5,000

Merchandise Inventory 586,000

Prepraid Insurance 35,000

Equipment 950,000

Accumulated Depreciatetion-Equipment 257,000

Notes Payable 120,000

Accounts Payable 148,000

Detoya, Payable 750,000

Gevera, Capital 600,000

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1,880,000 1,880,000

Required: Prepare the balance sheet for the new partnership as at June 1, 2018