PROBLEM 1 (FTG REVISED)

VAL, KHU, and LAWRENCE are partners in VAKHULAW CO. sharing profits in the ratio of 3:3:2. Investments are P600,000, P400,000, and P300,000, respectively. The partners agreed to admit TYONG-GO on the following basis: TYONG-GO is to pay VAL, P400,000 for 1/2 of VALs interest; TYONG-GO is also to invest P300,000 in the business. The partners agreed that revaluation of assets must be determined based on the agreed capital. The total capital of the partnership is to be P2,000,000, of which TYONG-GOs interest is to be P500,000 upon admission.

REQUIRED:

1. Prepare a statement of partners equity that will show the capital balances of VAL, KHU, LAWRENCE and TYONG-GO after admission of TYONG-GO, respectively.

Present your solution and the statement in good form.

2. Prepare the entries upon admission of TYONG-GO.