Question
QR and ST decided to combine their businesses and form a partnership. Below are their balance sheets before any adjustments: QR ST Cash P 2,048,400
QR and ST decided to combine their businesses and form a partnership. Below are their
balance sheets before any adjustments:
QR
ST
Cash
P
2,048,400
P
1,098,360
Accounts receivable
1,031,960
2,498,716
Inventories
528,160
1,144,448
Property, plant & equipment
(net)
613,380
852,224
Other assets
8,800
15,840
Total Assets
P
4,230,700
P
5,609,588
Accounts payable
P
787,336
P
1,072,060
Notes payable
1,000,000
-
Mortgage payable
-
1,440,000
QR, Capital
2,443,364
-
ST, Capital
__________
___3,097,528
Total Liabilities
&
Equity
P
4,230,700
P
5,609,588
The partners agreed that the property, plant and equipment of QR is under depreciated by
P80,000 and that of ST is over depreciated by P200,000. Accounts receivable of P 108,000
in QR's book and P140,000 in ST's book are uncollectible. The partnership decided to
assume the mortgage liability of ST. The partnership agreement provides for a profit and
loss ratio and capital interest of 60% to QR and 40% to ST. ST is willing to invest or
withdraw cash from the partnership to comply with the agreement.
Question 1: What are the capital balances of QR and ST right after the formation?
Question 2: What is the total assets of the partnership after formation?
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