Question

UAI Problem 2-2 (Two sole Proprietors formo pertnershiP Books by the portner chip) of used one of to be +he sole Propietors ossets Cn Octcber 1, 2014 Apri ond Aros their decided t Pool lbusiness 0ssetc and portnerchip The firm IS to toke form o ONer on besed ond business liobilities, quities Ore ass ume 1ronsferred the folowing odsustments net oss ets afkr P 350, 000 Arios 15 to be Vatued ot inventory a. Pq.00D ond P350o, for uncollec+ioe occ ounts of b. An alowonce ser up chould be respectively C Accrued to be recognized on April's P 21,000 of ore xpenses lbocks GOT cosh rve him a d. Arios contri bute suficaent 15 to to firm. the ne w Interest October 1 On of finoncia) position for April ond Arias Stotements below befor e adjustments Presenkd are Arios A pril P 187500 Cach 112, 500 450, 000 375.000 Accourts Receivable 40o, 000 300, 000 Merch ond5e Inventor Equipment Accumuloted Deprecioh on TOTO ASSets 250,000 300,000 ( 39,600) (12.500) PI,175.000 P 1, 050,000 A ccounts Royoble Copitol rotoi Liobilties Copto) P 345,000 830 000 P 250, 000 B00,000 Pi.050,000O Pi,195,000 Instructions Give the entries to odjust ond Close the of April. books 2 Give the entries required on the books of Arias for motion of port nership. of finanuol posihon upoh the fthe 3 Prepore o ctokment for the new portnershp of April 0nd Arias.

Answer 1

1. Entries to Adjust and Close the books of Accounts of April

Date Account Title 30-Sep Capital 30-Sep Allowance for uncollectible accounts Debit ($) 9,000 Credit ($) Narration Allowance for uncollectible accounts created 9,000 Allowance for uncollectible accounts created 21,000 30-Sep Capital 30-Sep Accrued Expenses Accrued expenses accounted for 21,000 Accrued expenses accounted for 3,45,000 8,00,000 30-Sep Accounts Payable 30-Sep Capital 30-Sep Cash 30-Sep Accounts Receivable 30-Sep Merchandise Inventory 30-Sep Equipment 30-Sep Accumulated Depreciation 30-Sep Accrued Expenses 30-Sep Allowance for Uncollectible accounts Closing of books of accounts of April Closing of books of accounts of April 1,87,500 Closing of books of accounts of April 4,50,000 Closing of books of accounts of April 4,00,000 Closing of books of accounts of April 2,50,000 Closing of books of accounts of April Closing of books of accounts of April Closing of books of accounts of April Closing of books of accounts of April 1,12,500 21,000 9,000

2. Entries in books of Arias upon Formation of Partnership

Date Account Title 30-SepMerchandise Inventory 30-Sep Capital Debit ($) Credit (S) Narration 50,000 Revaluation of Inventory 50,000 Revaluation of Inventory 7,500 30-Sep Capital 30-Sep Allowance for uncollectible accounts Allowance for uncollectible accounts created 7,500 Allowance for uncollectible accounts created 01-Oct Accounts Payable 01-OctApril Capital 01-Oct Cash 01-Oct Accounts Receivable 01-Oct Merchandise Inventory 01-Oct Equipment 01-Oct Accumulated Depreciation 01-Oct Accrued Expenses 01-Oct Allowance for Uncollectible accounts 1,87,500 4,50.000 4,00,000 2.50,000 3,45,000 Contribution of April to the new partnership accounted on Net Asset Basis 8,00,000 Contribution of April to the new partnership accounted on Net Asset Basis Contribution of April to the new partnership accounted on Net Asset Basis Contribution of April to the new partnership accounted on Net Asset Basis Contribution of April to the new partnership accounted on Net Asset Basis Contribution of April to the new partnership accounted on Net Asset Basis 1,12,500 Contribution of April to the new partnership accounted on Net Asset Basis 21,000 Contribution of April to the new partnership accounted on Net Asset Basis ,000 Contribution of April to the new partnership accounted on Net Asset Basis 9 3,57,500 01-OctCash 01-Oct Arias Capital Additional cash contributed by Arias to claim 60% interest in partnership 3.57.500 Additional cash contributed by Arias to claim 60% interest in partnership

3. Statement of Financial position of new Firm

Arias 2.50,000 4.50,000 9,000 April 345.000 21,000 8.00.000 Cash Accounts Receivable Allowance for uncollectible accounts Merchandise Inventory Equipment Accumulated Depreciation Total Assets April Arias 187.500 4,20,000 3.25.000 441,000 7,500 3,67,500 400.000 13.50,000 11,00,000 1,37,500 -37,500 262,500 11,66,000 14,50,000 Total Amount Liabilities and Equity 6,57,500 Accounts Payable Accrued Expenses 8,08,500 April Capital 7,50,000 Arias Capital Total Amount 5,95,000 21,000 8,00,000 12,00,000 12,00,000 2.000 -1.12.500 4,00,000 26,16,000 Total Liabilities and Equity 11.66,000 14,50.000 26,16,000