Draco has a bookstore called Dark Continent's Bookstore which has been operating for three years. On...
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Draco has a bookstore called Dark Continent's Bookstore which has been operating for three years. On May 2021, Vladimir invites him to put up a partnership. Draco agrees to close his business and invests his net assets in the partnership which will give him 60% interest in the partnership. Vladimir agrees to put up cash which will give him 40% interest in the partnership. The following are the assets and liabilities of the bookstore on May 1, 2021: Fair Market Value Account Cash Accounts Receivable Allowance for bad debts Inventory Land Building Accumulated Depreciation Building Furniture and Fixtures Accumulated Depreciation - F&F Accounts payable Mortgage Payable Draco, Capital Trial Balance Debit (Credit) 30,000.00 45,000.00 (7,500.00) 35,000.00 500,000.00 400,000.00 30,000.00 250,000.00 75,000.00 22,500.00 225,000.00 900,000.00 30,000.00 45,000.00 30,000.00 600,000.00 350,000.00 125,000.00 22,500.00 225,000.00 The articles of co-partnership was drawn after considering the following: 1. Set up 8% of customers' accounts receivable as doubtful after writing off P7,500 worthless accounts. 2. Inventories should be adjusted to 80% of its fair value. 3. Land and Building should be adjusted 95% of its fair market value. 4. Furniture & Fixture book value should be at P150,000. 5. Accrued expenses should be set up in the amount of 12,500. Questions: 11. How much is the adjusted balance of Draco's capital as at May 1, 2021? 12. How much is the total assets of the Draco's books after the adjustments and closing entries? 13. After recording the books in the partnership, how much is the non-current assets? 14. How much cash to be invested by of Vladimir to obtain 40% interest on the partnership? 15. After recording the contribution in the partnership books, how much is the net assets? 16. Assuming Vladimir invested P700,000 to have 50% interest in the partnership. Using bonus method, Draco's capital will decrease by? 17. Assuming Vladimir invested P700,000 to have 50% interest in the partnership. Using goodwill method, how much is the total assets? Draco has a bookstore called Dark Continent's Bookstore which has been operating for three years. On May 2021, Vladimir invites him to put up a partnership. Draco agrees to close his business and invests his net assets in the partnership which will give him 60% interest in the partnership. Vladimir agrees to put up cash which will give him 40% interest in the partnership. The following are the assets and liabilities of the bookstore on May 1, 2021: Fair Market Value Account Cash Accounts Receivable Allowance for bad debts Inventory Land Building Accumulated Depreciation Building Furniture and Fixtures Accumulated Depreciation - F&F Accounts payable Mortgage Payable Draco, Capital Trial Balance Debit (Credit) 30,000.00 45,000.00 (7,500.00) 35,000.00 500,000.00 400,000.00 30,000.00 250,000.00 75,000.00 22,500.00 225,000.00 900,000.00 30,000.00 45,000.00 30,000.00 600,000.00 350,000.00 125,000.00 22,500.00 225,000.00 The articles of co-partnership was drawn after considering the following: 1. Set up 8% of customers' accounts receivable as doubtful after writing off P7,500 worthless accounts. 2. Inventories should be adjusted to 80% of its fair value. 3. Land and Building should be adjusted 95% of its fair market value. 4. Furniture & Fixture book value should be at P150,000. 5. Accrued expenses should be set up in the amount of 12,500. Questions: 11. How much is the adjusted balance of Draco's capital as at May 1, 2021? 12. How much is the total assets of the Draco's books after the adjustments and closing entries? 13. After recording the books in the partnership, how much is the non-current assets? 14. How much cash to be invested by of Vladimir to obtain 40% interest on the partnership? 15. After recording the contribution in the partnership books, how much is the net assets? 16. Assuming Vladimir invested P700,000 to have 50% interest in the partnership. Using bonus method, Draco's capital will decrease by? 17. Assuming Vladimir invested P700,000 to have 50% interest in the partnership. Using goodwill method, how much is the total assets?
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Financial Accounting
ISBN: 9781264229734
11th Edition
Authors: Robert Libby, Patricia Libby, Frank Hodge
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