Antonio and Gayas are fierce competitors who sell hunting equipment. They finally decided to join forces...

 

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Antonio and Gayas are fierce competitors who sell hunting equipment. They finally decided to join forces in order to increase their business and reduce costs. An agreement is reached between the two to begin operations as a partnership on Mar 1, 2021. Antonio and Gayas have decided to share profits or losses in the ratio of 60:40 respectively. The statements of financial position of Antonio and Gayas as at Mar 1, 2021 are as follows: Antonio Gayas 30,000 169,200 (14,400) Cash 42,000 Accounts receivable 389,200 Allowance for doubtful accounts (22,400) 461,600 Merchandise inventory 300,800 Prepaid rent Office supplies 6,000 30,400 4.000 Land 40,000 Building Accumulated depreciation - building Office equipment Accumulated depreciation- office equipment Repair equipment Accumulated depreciation- repair equipment 128,000 (32,000) 24,000 62,000 (6,000) 172,000 (68,000) 1,158,000 (13,200) Total assets 544,400 Notes payable Accounts payable Mortgage payable Antonio Capital Gayas Capital Total liabilities and owners' equity 120,000 170,000 200,000 668,800 111,600 432,800 1,158,800 544,400 The name of the partnership will be Antonio and Gayas Hunting Gears. The partners have agreed to effect the following adjustments: a. Antonio's merchandise inventory is to be reduced by 105,200. The inventory of Gayas will be increased by 7,200. b. The following are the fair market values of the various assets: Antonio Gayas Land 108,000 Building Office equipment Repair equipment C. One-half of the notes payable of Antonio are personal notes. All other liabilities of the partners are assumed by the partnership. d. The prepaid rent in the books of Gayas will be consumed by the partnership. 192,000 16,000 40,000 124,000 REQUIRED: 1. Prepare the necessary adjusting journal entries in the books of Antonio. (6 pts) 2. Prepare the necessary adjusting journal entries in the books of Gayas. (2 pts) 3. Calculate Antonio's capital after adjustment. (4pts) 4. Calculate Gayas' capital after adjustment. (3pts) Antonio and Gayas are fierce competitors who sell hunting equipment. They finally decided to join forces in order to increase their business and reduce costs. An agreement is reached between the two to begin operations as a partnership on Mar 1, 2021. Antonio and Gayas have decided to share profits or losses in the ratio of 60:40 respectively. The statements of financial position of Antonio and Gayas as at Mar 1, 2021 are as follows: Antonio Gayas 30,000 169,200 (14,400) Cash 42,000 Accounts receivable 389,200 Allowance for doubtful accounts (22,400) 461,600 Merchandise inventory 300,800 Prepaid rent Office supplies 6,000 30,400 4.000 Land 40,000 Building Accumulated depreciation - building Office equipment Accumulated depreciation- office equipment Repair equipment Accumulated depreciation- repair equipment 128,000 (32,000) 24,000 62,000 (6,000) 172,000 (68,000) 1,158,000 (13,200) Total assets 544,400 Notes payable Accounts payable Mortgage payable Antonio Capital Gayas Capital Total liabilities and owners' equity 120,000 170,000 200,000 668,800 111,600 432,800 1,158,800 544,400 The name of the partnership will be Antonio and Gayas Hunting Gears. The partners have agreed to effect the following adjustments: a. Antonio's merchandise inventory is to be reduced by 105,200. The inventory of Gayas will be increased by 7,200. b. The following are the fair market values of the various assets: Antonio Gayas Land 108,000 Building Office equipment Repair equipment C. One-half of the notes payable of Antonio are personal notes. All other liabilities of the partners are assumed by the partnership. d. The prepaid rent in the books of Gayas will be consumed by the partnership. 192,000 16,000 40,000 124,000 REQUIRED: 1. Prepare the necessary adjusting journal entries in the books of Antonio. (6 pts) 2. Prepare the necessary adjusting journal entries in the books of Gayas. (2 pts) 3. Calculate Antonio's capital after adjustment. (4pts) 4. Calculate Gayas' capital after adjustment. (3pts)

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Answer Solution Working Note Calculation of Total Assets and Total Liabilities tha... View the full answer