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 is The capital balances of QR and ST right after the formation?

A. 6,896,292 ; 4,597,528

B. 6,896,292 ; 3,157,528

C. 2,255,364 ; 1,503,576

D. 2,255,364 ; 3,157,528

Question 2: What is the Total Assets of the partnership after formation?

A. 5,618,336

B. 8,058,336

C. 6,618,336

D. 9,840,288