Mrs. French operated a specialty shop that sold Souvenir Items and accessories. Her post-closing trial balance Dec. 31,2018 as follows:

French

Post-Closing Trial Balance

Dec. 31,2018

Debit Credit

Cash P50,000

Accounts Receivable 150,000

Allowance for Uncollectible Accounts P30,000

Inventory 450,000

Equipment 200,000

Accumulated Depreciation 75,000

Accounts Payable 55,000 French, Capital 690,000

P 850,000 P850,000

French plans to enter into a partnership with trusted associate, Fried, effective Jan.1 2019. Profits or losses will be shared equally. French is to transfer all assets and liabilities of her shop to the partnership after revaluation.

Fried will invest cash equal to 2/3 of French investment after revaluation. The agreed values are as follows: Accounts receivable (net), P150,000; inventory, P400,000; and equipment (net), P150,000. The partnership will operate under the business name of Snacks to Go

Required:

1. Prepare necessary journal entries to form the partnership. ( Books of Sole Proprietor and Partnership)

2. Prepare the partnerships statement of financial position as at the date of formation of the partnership.