Question
The statement of financial position as of July 31, 2012, for the business owned by Katniss Everdeen, shows the following assets and liabilities: Cash P50,000
The statement of financial position as of July 31, 2012, for the business owned by Katniss Everdeen, shows the following assets and liabilities:
Cash
P50,000
Furniture and fixtures
P164,000
Accounts receivable
134,000
Accounts Payable
28,800
Merchandise inventory
220,000
It is estimated that 5% of the receivables will prove uncollectible. The cash balance includes a 1,000 investment shares classified as fair value through profit and loss recorded at its cost of P 8,000. The shares last sold on the market were at P 21.50 per share. Merchandise inventory includes obsolete items costing P 20,000 that will probably realized only P 4,000. Depreciation has never been recorded; however, the furniture and fixtures are two years old, have estimated total life of 10 years and would cost P 240,000 if purchased new. Prepaid items amount to P 7,000. Peeta Mellark is to be admitted as a partner upon investing P 200,000 cash and P 100,000 merchandise.
How much capital is to be credited to Katniss Everdeen upon formation of the partnership?
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