Problem 2 4 (Cash, Non-cash and Net Assets Contributions; Books of the Sole Proprietor to be Used by the Partnership) On January 1, 2014, Abante, Arevalo, and Almonte decided to form a partnership. Abante, a sole proprietor, will transfer to the partnership his net assets, excluding cash. Arevalo will contribute cash in an amount equal to one and a half times the investment of Abante. Almonte will contribute a piece of land with an agreed value of P1,800,000 subject to a mortgage of P300,000 to be assumed by the partnership. The statement of financial position of Abante is as shown on the next page Ch 2Natre and Abante Company Statement of Financial Position January 1, 2014 Assets 360,000 P 840,000 Cash Accounts Receivable Less Allowance for Uncollectible Accounts Merchandise Inventory Furniture and Equipment Less Accumulated Depreciation Total Assets P 150,000 1,200,000 90,000 P 1,050,000 210,000 840,000 P 3.150,000 Liabilities and Capital P 450,000 2,700,000 P 3,150,000 Accounts Payable Abante, Capital Total Liabilities and Capital The Articles of Co-Partnership executed for the purpose calls for adjustments to the assets, as follows: a. The allowance for uncollectible accounts should be increased by P150,000. b. The inventories should be valued at P1,000,000 only c. The furniture and equipment are underdepreciated by P240,000. d. The new partnership is to credit Abante with a capital of P2,000,000. The exces capital credit over the fair value of the net assets transferred is to be recognizod a goodwill. Instructions: Prepare the entries to record the partnership formation assuming The books of Abante are to be used by the partnership. 1. New set of books are to be opened for the partnership. 2