Mary Hartmann, sole proprietor of a hardware business, decides to form a partnership with Ned Isaacs.

Mary's accounts are as follows:

Book Value Market Value

---------------- -----------------

Cash P 20,000 P 20,000

Accounts Receivable (net) 52,000 45,000

Inventory 112,000 125,000

Land 40,000 100,000

Building (net) 300,000 340,000

Accounts Payable 25,000 25,000

Mortgage Payable 75,000 75,000

Ned agrees to contribute P70,000 for a 20% interest.

REQUIRED

1) Journalize the entries to record (a) Mary's investment and (b) Ned's investment.

2) Prepare statement of financial position after the formation.