A statement of financial position for Green and Gold, prepared on October 1, 2018 is shown...

 

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A statement of financial position for Green and Gold, prepared on October 1, 2018 is shown below. Partners share profit and loss in the ratio of 75:25, respectively. GREEN AND GOLD Statement of Financial Position October 1, 2018 Cash Accounts Receivable Less allowance for bad Debts Inventories Office Furniture Less accumulated depreciation Goodwill Total Assets Accounts Payable Green, Capital Gold, Capital Total Liabilities and Capital ASSETS LIABILITIES AND CAPITAL P 124,000 12,000 P 600,000 160,000 P 42,000 112,000 206,000 440,000 100,000 P 900,000 P 104,000 394,000 402,000 P 900,000 An appraisal of the assets discloses the following fair values: Inventories, P 296,000; Equipment P 520,000. Green and Gold, together with three other friends, decided to incorporate as Color Corporation with 50,000 authorized shares of P 50 par ordinary share capital. The three other incorporators acquired 10,000 shares at P 70 per share. Green and Gold received 14,000 shares in exchange for the net assets of the partnership except cash. On this date, the fair value of the stock is P 70 per share. Green agrees to take 7,500 shares and Gold, 6,500 shares. The partnership cash is appropriately divided between Green and Gold. Required: Give the journal entries to record the above transactions on the books of the partnership and on the new books of the corporation. A statement of financial position for Green and Gold, prepared on October 1, 2018 is shown below. Partners share profit and loss in the ratio of 75:25, respectively. GREEN AND GOLD Statement of Financial Position October 1, 2018 Cash Accounts Receivable Less allowance for bad Debts Inventories Office Furniture Less accumulated depreciation Goodwill Total Assets Accounts Payable Green, Capital Gold, Capital Total Liabilities and Capital ASSETS LIABILITIES AND CAPITAL P 124,000 12,000 P 600,000 160,000 P 42,000 112,000 206,000 440,000 100,000 P 900,000 P 104,000 394,000 402,000 P 900,000 An appraisal of the assets discloses the following fair values: Inventories, P 296,000; Equipment P 520,000. Green and Gold, together with three other friends, decided to incorporate as Color Corporation with 50,000 authorized shares of P 50 par ordinary share capital. The three other incorporators acquired 10,000 shares at P 70 per share. Green and Gold received 14,000 shares in exchange for the net assets of the partnership except cash. On this date, the fair value of the stock is P 70 per share. Green agrees to take 7,500 shares and Gold, 6,500 shares. The partnership cash is appropriately divided between Green and Gold. Required: Give the journal entries to record the above transactions on the books of the partnership and on the new books of the corporation.

Answer rating: 100% (QA)

Lets calculate the remaining cash distribution Total Cash in the Partnership P 42000 The capital sharing ratio for Green and Gold is 7525 which sums u... View the full answer