On June 13, 2006, Arzadon and Escano decided to combine their assets and form a partnership....
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On June 13, 2006, Arzadon and Escano decided to combine their assets and form a partnership. The partnership is to take over the business assets and assume the business liabilities; and capitals are to be based on net assets transferred after the following adjustments: a. Escano's inventory is to be valued at P140,000. b. A 5% allowance for uncollectible accounts is to be established on the accounts receivable of each party. c. Accrued liabilities of P8,000 are to be recognized on Arzadon's books. d. Escano is to be allowed goodwill of P100,000 and is to invest additional cash necessary to have a 60% interest in the new firm. The statements of financial position on June 13 before adjustments are given below: Arzadon Escano P 75,000 P 45,000 180,000 150,000 160,000 120,000 100,000 120,000 (45,000) (15,000) P470,000 P420,000 Cash Accounts Receivable Inventory Property and Equipment Accumulated Depreciation Accounts Payable Capital P138,000 332,000 P470,000 P100,000 320,000 P420,000 Required: 1. Prepare the entries to adjust and close books of Arzadon and Escano. 2. Prepare the opening entries in the books of the partnership. 3. Prepare the statement of financial position as at June 13, 2006. On June 13, 2006, Arzadon and Escano decided to combine their assets and form a partnership. The partnership is to take over the business assets and assume the business liabilities; and capitals are to be based on net assets transferred after the following adjustments: a. Escano's inventory is to be valued at P140,000. b. A 5% allowance for uncollectible accounts is to be established on the accounts receivable of each party. c. Accrued liabilities of P8,000 are to be recognized on Arzadon's books. d. Escano is to be allowed goodwill of P100,000 and is to invest additional cash necessary to have a 60% interest in the new firm. The statements of financial position on June 13 before adjustments are given below: Arzadon Escano P 75,000 P 45,000 180,000 150,000 160,000 120,000 100,000 120,000 (45,000) (15,000) P470,000 P420,000 Cash Accounts Receivable Inventory Property and Equipment Accumulated Depreciation Accounts Payable Capital P138,000 332,000 P470,000 P100,000 320,000 P420,000 Required: 1. Prepare the entries to adjust and close books of Arzadon and Escano. 2. Prepare the opening entries in the books of the partnership. 3. Prepare the statement of financial position as at June 13, 2006.
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Step 16 Adjusting Entries in Books of Arzadon June 13 2006 Date Account Dr Cr Capital Account 9000 To Provision for Accounts Receivable 9000 Provision for Accounts Receivable being Created from Capita... View the full answer
Related Book For
Financial Accounting Reporting Analysis And Decision Making
ISBN: 9780730313748
5th Edition
Authors: Shirley Carlon, Rosina Mladenovic Mcalpine, Chrisann Palm, Lorena Mitrione, Ngaire Kirk, Lily Wong
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