Partnership Formation (Please add an explanation so I can study it later. Thanks a lot!)

PROBLEM #1

Question 1:

Using the same information above, how much is the total liabilities of the partnership immediately after its formation? Using the same information above, what is the total asset of the partnership after its formation? On March 1, 2008, Jesse and James decided to combine Their businesses and form a partnership. Their balance sheets on the same date, before adjustments, showed the following: Jesse James Cash Pi 8,000 P7,500 Accounts receivable 37,000 27,000 Inventories 60,000 39,000 Furniture and xtures, net 60,000 l8,000 Office equipment, net 23,000 5,500 Prepaid rent 12,750 6,000 Total 21 0,750 1 03,000 Accounts payable P9i,500 P36,000 Capital 1 19,250 67,000 Total 21 0,750 1 03,000 They agreed to have the following items recorded in their respective books: a. Provide 2% allowance for doubtful accounts based on receivables b. Jesse's furniture and xtures should be P62,000, while James' ofce equipment is under-depreciated by P500. c. Rent expense previously incurred by Jesse was not recorded amounting to P2000, while salary expense incurred by James was not recorded amounting to Pi,600. d. The market values of the inventories amounted to P59,000 and P42,000 for Jesse and James, respectively. What is the net (debit) credit adjustment to the capital account of James (indicate whether debit or credit adjustment)? Sample final answer: 15000 debit