On May 1, 2022, Carlo has been in a trading business for five years as a sole proprietor. He needed additional capital to fund business expansion so he decided to invite Jamie by investing cash for a one-third interest in the new partnership, CABLES Trading. CABLES Trading would assume the liabilities of Carlo's business. Jamie accepted the invitation and both agreed to revalue assets of Carlo's business as itemized: Accounts Receivable $50,000; Merchandise Inventory P28,000; Office Equipment $22,000; and Land $279,000. Account balances in the books of Carlo were as follows: Account Titles Debit Credit Cash P135,000 Accounts Receivable 60,000 Allowance for Doubtful Accounts P 4,000 Merchandise Inventory 25,000 Office Equipment 33,000 Accumulated Depreciation 15,000 Land 260,000 Accounts Payable 194,000 Carlo, Capital 300,000 How much is the capital of CABLES Trading upon formation?
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- On January 1, 2022, Sam and Sara formed a new business entity called Nice Brother Co. Sam contributes $250,000 cash and Sara contributes land with an adjusted basis of $300,000 and fair market value of $492,000 with a mortgage of $258,000 that is assumed by Nice Brother Co. Assume the following operating results for 2022: Sales $ 1,500,000 Interest income – from a bank $ 3,200 Royalties $ 60,000 Loss from sale of investment $ (7,000) Cost of goods sold $ 622,000 Salaries $ 450,000 Rent $ 144,000 Maintenance $ 24,000 Utilities $ 58,000 EPA penalty $ 1,000 Depreciation ? Charitable contribution $ 30,000 Payment to Sam for retirement* $ 15,000 *payment considered a guaranteed payment if the entity is a partnership The company’s only depreciable asset is equipment (useful life of 5 years) which will be purchased in 2022 for $100,000. The only asset sold was an investment purchased on 2/2/22 for $28,000 and sold on 11/4/22 for $21,000 What are the separately stated items allocated…On July 1, 2020, Wency and William agreed to form a partnership from their respective proprietorship businesses and to share profits equally. Wency and William’s balance sheet before the formation were: Wency William Cash P 6,000 P 15,000 Accounts receivable 36,000 21,000 Merchandise inventory 99,000 126,000 Prepaid rent 12,000 Store equipment 120,000 90,000 Accum. Depreciation ( 45,000) ( 54,000) Building 375,000 Accum. Depreciation (75,000) Land 180,000 - Totals P 696,000 P 210,000 Accounts payable P 22,500 P 9,000 Mortgage payable 180,000 - Capital 493,500 201,000 Totals P 696,000 P 210,000 The fair values of Wency’s and William’s assets were: Wency William Merchandise inventory P 81,000 P 135,000 Prepaid rent - 0 Store equipment 45,000 19,500 Building 750,000 -…8. Bruce and Rachel agree to form a partnership on July 1. Bruce, who has been trading as a sole proprietor, will invest certain business assets at agreed valuations, transfer his business liabilities and contribute sufficient cash to bring his total contribution to a 60% interest over the new business. Details of Bruce's assets and liabilities are given below. (see attached image, please answer it based on your knowledge, thank you!) Rachel agrees to bring in inventory with a value of P146,500 and P93,500 in cash for a 40% interest in the partnership. The partners have agreed on the following: a) capital accounts will remain fixed; b) 12% interest profit computed on capital; c) salaries of P30,000 each for 2019 but will be twice this amount next year and thereafter; d)10% interest charge on partners' drawings made beyond the agreed salaries; and e) remaining profits are to be shared equally. Direction: a. Prepare two journal entries to set up the partnership. b. Prepare a statement…
- Cathy, Tim and Lucas started a partnership online retailing business as from 1 January 2022. The agreement set out the following basic arrangements: Cathy to contribute $12 000 in account receivables and inventory valued at $8 000. She also contributed computers valued at $10 000 on her record. The fair value of these computers was $2 000 lower than Cathy's booking record on 1 January 2022. Tim to contribute $26 000 in cash and office furniture, which originally cost $35 500. Based on Tim's accounting record, the accumulated depreciation of office furniture showed $15 000. The bank loan associated with office furniture is $10 000. Lucas to contribute inventory valued at $24 750 and to act as managing partner at a salary of $20 000 per year. Interest to be allowed at 5% p. a. on the capital contribution by the partners. Residual profits or losses to be shared equally among three partners. Ignore GST Required 1) Prepare the journal entries necessary to open the records of the…Lawler and Riello formed a partnership on March 15, 2024. The partners agreed to contribute equal amounts of capital. Lawler contributed her sole proprietorship's assets and liabilities (credit balances in parentheses) as follows: X Data table Lawler's Business Current Market Value its. Select the explanation on the last line of the journal entry table.) Accounts Receivable 10,600 Merchandise Inventory 29,000 Prepaid Expenses 2,800 Credit 26,000 Store Equipment, Net Accounts Payable (25,000) Done More info On March 15, Riello contributed cash in an amount equal to the current market value of Lawler's partnership capital. The partners decided that Lawler will earn 60% of partnership profits because she will manage the business. Riello agreed to accept 40% of the profits. During the period ended December 31, the partnership earned net income of $70,000. Lawler's withdrawals were $36,000, and Riello's withdrawings totaled $26,000. Print Done Requirement 1. Journalize the partners' initial…Yin and Jordan form a Corporation together on March 22, 2022. Jordan transfers cash of $300,000 in exchange for 30,000 shares. Yin transferred a Patent with a basis of $50,000 and FMV of $60,000 in exchange for 26,000 shares in the company and an office building with a basis of $110,000, liabilities of $40,000 and FMV of $200,000. What is Yin's basis in the 26,000 shares she got in the exchange on March 22, 2022? What is the Corporation's basis in the "Office Building" received from Yin?
- 8. Bruce and Rachel agree to form a partnership on July 1. Bruce, who has been trading as a sole proprietor, will invest certain business assets at agreed valuations, transfer his business liabilities and contribute sufficient cash to bring his total contribution to a 60% interest over the new business. Details of Bruce's assets and liabilities are given below. Rachel agrees to bring in inventory with a value of P146,500 and P93,500 in cash for a 40% interest in the partnership. The partners have agreed on the following: a) capital accounts will remain fixed; b) 12% interest profit computed on capital; c) salaries of P30,000 each for 2019 but will be twice this amount next year and thereafter; d)10% interest charge on partners' drawings made beyond the agreed salaries; and e) remaining profits are to be shared equally. Direction: a. Prepare two journal entries to set up the partnership. b. Prepare a statement of financial position for the partnership as at July 1 just after formation.…Washington and Jacobs formed a partnership on March 15, 2018. The partners agreed to contribute equal amounts of capital. Washington contributed her sole proprietorship’s assets and liabilities (credit balances in parentheses) as follows: Washington’s Business Book Value Current Market Value Accounts Receivable $ 12,200 $ 10,500 Merchandise Inventory 42,000 35,000 Prepaid Expenses 3,500 2,800 Store Equipment, Net 42,000 23,000 Accounts Payable (26,000) (26,000) On March 15, Jacobs contributed cash in an amount equal to the current market value of Washington’s partnership capital. The partners decided that Washington will earn 60% of partnership profits because she will manage the business. Jacobs agreed to accept 40% of the profits. During the period ended December 31, the partnership earned net income of $72,000. Washington’s withdrawals were $36,000, and Jacobs’s withdrawals totaled $26,000. Requirements Journalize the…KATY, a sole proprietor wanted to expand her profitable business but she does not have enough resources. So, she thought of inviting PERRY to join her and formed a partnership on April 1, 2020. Just before admission, KATY had the following assets and liability accounts: Cash - ₱420,000; Accounts receivable -₱380,000; Inventories -₱250,000;Notes payable -₱100,000. PERRY agreed to contribute cash equal to 30% of KATY’s capital after considering the following adjustments: (a) 2% allowance for bad debts should be recognized, (b) the inventories have fair market value equal to 120% of the balance. How much should Perry contribute to the partnership?
- KATY, a sole proprietor wanted to expand her profitable business but she does not have enough resources. So, she thought of inviting PERRY to join her and formed a partnership on April 1, 2020. Just before admission, KATY had the following assets and liability accounts: Cash - ₱420,000; Accounts receivable -₱380,000; Inventories -₱250,000; Notes payable -₱100,000. PERRY agreed to contribute cash equal to 30% of KATY’s capital after considering the following adjustments: (a) 2% allowance for bad debts should be recognized, (b) the inventories have fair market value equal to 120% of the balance. How much is the total assets of the partnership after the formation? *Juan is a proprietor owning the following assets as of June 1, 2022:Cash – P 3,000Trade Receivables – P 15,000Inventory – P 20,000Office equipment P 30,000Accounts payable – P 10,000Pedro would like to form a partnership with Juan by investing Cash and Inventory amounting to P 20,000 and P 50,000, respectively. Juan agrees and on June 1, 2022, they formed the partnership. During formation, it was assessed that 5% may be uncollectible. Items in inventory destroyed by rust amounted to P 1,000. The office equipment, meanwhile, was not depreciated for two years. The office equipment has an estimated useful life of six years.After adjusting the books, how much is the total assets of the partnership?2. Amion admits Basa for a partnership interest in his business. The balance sheet accounts of Amion on November 30, 2020 prior to the admission of Basa are as follows: Debit Credit Cash 312,000 Merchandise inventory 468,000 Accounts receivable Accounts payable P161,200 Amion, capital