On June 30, 2012, AA Company a sole proprietorship expands the company and establishes a partnership...

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On June 30, 2012, AA Company a sole proprietorship expands the company and establishes a partnership with BB and CC. The partners agreed to share profits and losses as follows: AA, 50%; BB, 25%; CC, 25%. They further agreed that the beginning capital balances of the partners will reflect the same ratio. BB is to contribute P40,000 cash and a transportation equipment that has an original cost of P520,000, book value of P420,000, and a fair market value of P370,000. The transportation equipment is subject to a P242,000 mortgage that the partnership will assume. CC, on the other hand, will invest P66,000 cash and marketable securities costing P252,000 but currently worth P345,000. AA's investment in the partnership is the AA Company. The balance sheet of AA Company on the date of formation follows: Liabilities and Capital Accounts payable Notes payable AA, Capital Assets Cash 60,000 288,000 432,000 420,000 318,000 Accounts receivable – net 372,000 Inventory Office equipment 510,000 Total assets 1,200,000 Total liabilities and capital 1,200,000 The office equipment is net of accumulated depreciation of P120,000. The partners agreed that the inventory is worth P510,000, and the office equipment is worth half its original cost. The notes payable will not be assume by the partnership. Compute the partner's capital under Bonus and Goodwill method. On June 30, 2012, AA Company a sole proprietorship expands the company and establishes a partnership with BB and CC. The partners agreed to share profits and losses as follows: AA, 50%; BB, 25%; CC, 25%. They further agreed that the beginning capital balances of the partners will reflect the same ratio. BB is to contribute P40,000 cash and a transportation equipment that has an original cost of P520,000, book value of P420,000, and a fair market value of P370,000. The transportation equipment is subject to a P242,000 mortgage that the partnership will assume. CC, on the other hand, will invest P66,000 cash and marketable securities costing P252,000 but currently worth P345,000. AA's investment in the partnership is the AA Company. The balance sheet of AA Company on the date of formation follows: Liabilities and Capital Accounts payable Notes payable AA, Capital Assets Cash 60,000 288,000 432,000 420,000 318,000 Accounts receivable – net 372,000 Inventory Office equipment 510,000 Total assets 1,200,000 Total liabilities and capital 1,200,000 The office equipment is net of accumulated depreciation of P120,000. The partners agreed that the inventory is worth P510,000, and the office equipment is worth half its original cost. The notes payable will not be assume by the partnership. Compute the partner's capital under Bonus and Goodwill method.

Answer rating: 100% (QA)

Partners capital under bonus method AA CC Capital P 694500 P 347250 P 347250 Explanation ... View the full answer