On March 1, 2013, Santos and Ramos, decided to combine their stores to form the S &
Question:
On March 1, 2013, Santos and Ramos, decided to combine their stores to form the S & R Partnership. The partnership is to take over the net assets, subject to the following conditions: Inventories are to be valued at P20,000 each.
b. An allowance for bad debts of 5% of the accounts receivable should be set up for both partners after writing off P3,000 of the customer's account of Santos. Market value of Santos' equipment is P19,800 while that of Ramos should be 50% depreciated.
d. Accrued expenses should be recognized for Santos amounting to P650. The contribution of Santos represents a 60% interest. a. с. e. The financial position of the businesses owned by the partners on March 1, before the agreed adjustments, appears as follows:
Santos P 8,600 28,000 29,000 24,000 P 89,600 Ramos P 5,000 14,000 26,000 20,000 P 65,000
Cash Accounts Receivable Inventory Equipment Totals P 1,000 5,000 14,650 68.950 P 89,600
Allowance for Bad Debts Allowance for Depreciation Accounts Payable Capital Totals P 5,000 15,000 45,000 P 65,000
Required:
a. Determine the adjusted capital accounts of the partners.
b. Compute for the partners' agreed equity.
c. Give the proper treatment for the difference between adjusted capital and agreed capital.
Fundamental accounting principle
ISBN: 978-0078025587
21st edition
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta