Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On June 30, 2012, AA Company a sole proprietorship expands the company and establishes a partnership with BB and CC. The partners agreed to share

image text in transcribed

On June 30, 2012, AA Company a sole proprietorship expands the company and establishes a partnership with BB and CC. The partners agreed to share profits and losses as follows: AA, 50%; BB, 25%; CC, 25%. They further agreed that the beginning capital balances of the partners will reflect the same ratio. BB is to contribute P40,000 cash and a transportation equipment that has an original cost of P520,000, book value of P420,000, and a fair market value of P370,000. The transportation equipment is subject to a P242,000 mortgage that the partnership will assume. CC, on the other hand, will invest P66,000 cash and marketable securities costing P252,000 but currently worth P345,000. AA's investment in the partnership is the AA Company. The balance sheet of AA Company on the date of formation follows: Assets Cash Accounts receivable - net Inventory Office equipment Total assets 60,000 288,000 432,000 420,000 1,200,000 Liabilities and Capital Accounts payable Notes payable AA, Capital 318,000 372,000 510,000 Total liabilities and capital 1,200,000 The office equipment is net of accumulated depreciation of P120,000. The partners agreed that the inventory is worth P510,000, and the office equipment is worth half its original cost. The notes payable will not be assume by the partnership. Compute the partner's capital under Bonus method

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Audit Planning A Risk Based Approach

Authors: K. H. Spencer Pickett

1st Edition

047169052X, 978-0471690528

More Books

Students also viewed these Accounting questions

Question

11. Are your speaking notes helpful and effective?

Answered: 1 week ago

Question

The Goals of Informative Speaking Topics for Informative

Answered: 1 week ago