WHAT IS THE JOURNAL ENTRY IN THE PARTNERSHIP'S BOOKS ON JULY 1, 20X1 TO REFLECT THE SEPARATION OF C.

C dies from a broken heart on July 1, 20x1. It was agreed that C's estate shall receive cash of P2,000,000 and equipment with carrying amount of P400,000 and fair value of P1,200,000 as settlement of C's interest in the partnership. The assets will be transferred as soon as the legal proceedings on C's estate are finalized. The entry in the partnership's books on July 1, 20x1 to reflect the separation of C includes The statement of financial position of the partnership of A and B as of December 31, 20x1 is shown below: Cash 33,354 Accounts receivable 802,426 Inventory 380,137 Land 603,000 Building 428,267 Equipment 85,134 Other assets 5,600 Total assets 2,337,918 Accounts payable 422,590 Notes payable 545,000 A, capital 641,976 B, capital 728,352 Total liabilities and equity 2.337.918 A and B share in profits and losses equally. On January 1, 20x2, C informed A and B of his intention to invest in the partnership for a 20% interest. The partners agreed on the following adjustments prior to C's admission: o Accounts receivable of P55,000 should be written-off. o Inventories of P12,200 are obsolete and have no resale value. o The 'Other assets' should be written off