PARTNESHIP FORMATION

PROBLEM 3: EXERCISES , 1. Day and Night contributed the following 1n fOltming a Cash 280,000 ' - Accounts receivable 100,000 ' Inventory 160,000 ' 760,000 Building (at carrying amount) ._______ 540,000 760,000 Total # I Additional information: 0 Only 60% of the accounts receivable is recoverable. 0 The net realizable value of the inventory is P120000. Day acquired the inventory on account; the partnership will assume the unpaid balance of P60,000. . 0 The building has a fair value of P900000. Requirement: Provide the journal entry. 2. Use the information in problem 1. Day and Night agreed to share in profits and losses based on a 30:70 ratio. A partner with decient contribution shall provide additional cash in order for his capital balance to reect his. profit and .loss sharing ratio. Requirement: Provide the entry to record the additional inveStment of the partner with deficient contribution. ' 3. Use the information in problem 1. Day and Night agreed to have equal credits to their capital accounts. The bonus method shall1 be used. ' ' Requirements: a. Provide the compound journal entry. b. Provide the simple journal entries. Partnership Formation ' 19 MM ' 4. Use the information in problem 1. Day and Night agreed to have equal credits to their capital accounts. Cash settlement is to be made between the partners for the adjustrnents on their capital balances. Requirement: Describe how, the cash settlement should be made and how would it be accounted for in the partnership books. 5. Use the information in problem 1. Day and Night agreed to have , equal credits to their capital accounts. Additional investment or partial withdrawal shall be made by a partner from the partnership for any adjustment to his capital balance. Requi'rentei-zt: Which partner should make an additional investment and which partner should make a withdrawal