Problem 1 2. May and Beth formed a partnership by combining their businesses. The following ledger balances were taken from their books as of January 31, 2020: May Beth Debit(Credit) Debit(Credit) Cash Accounts Receivable 250,000 150,000 135,000 145,000 Allowance for Bad Debts (4,700) (5,000) Inventory Supplies Equipment 250,000 260,000 8,000 10,000 150,000 110,000 Accumulated Depreciation (60,000) (66,000) Accounts Payable May, Capital (270,000) (205,000) (458,300) Beth, Capital (399,000) The following adjustments were agreed upon: A. I11 the books of May 1. The allowance for bad debts should be 5% of outstanding receivables. 2. Supplies unused amounted to P2,500. 3. The equipment should be 50% depreciated. 4. Inventory will be valued at 110% of book value. B. In the books of Beth. 1. The allowance for bad debts should be 5% of outstanding receivables. 2. Supplies unused amounted to P1,000. 3. The equipment should be 50% depreciated. 4. Inventory will be valued at 95% of book value. REQUIRED: Adjust and close the books of May. Adjust and close the books of Beth. Record the investment of May and Beth in the new set of books. 4. Prepare the statement of financial position after the formation of the partnership. WP.\