A and B formed a partnership. The following are their contributions

	A	B
Cash	P 160,000	-
Accounts receivable	100,000	-
Inventory	160,000	-
Land		P 120,000
Building		250,000
Total	420,000	370,000
Note payable	120,000
A, capital	300,000
B, capital		370,000
Total	P 420,000	P 370,000

Additional information:

Included in accounts receivable is an account amounting to P50,000 which is deemed uncollectible.

The inventory has an estimated selling price of P250,000 and estimated costs to sell of P30,000.

An unpaid mortgage of P10,000 on the land is assumed by the partnership.

The building is over-depreciated by P40,000.

The building also has an unpaid mortgage amounting to P50,000, but the mortgage is not assumed by the partnership. B agreed to settle the mortgage using his personal funds.

The note payable is stated at face amount. A proper valuation requires the recognition of a P20,000 discount on note payable.

Prepaid expenses and accrued expenses amounting to P5,000 and P10,000, respectively are to be recognized on the books of partner A.

A and B shall share in profits and losses 60% and 40%, respectively.

Compute for the adjusted balances in partner A’s capital accounts.

Answer rating: 100% (QA)

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