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Compute how much should perry contribute to the partnership

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Reference no: EM132771600

Problem 1: KATY, a sole proprietor wanted to expand her profitable business but she does not have enough resources. So, she thought of inviting PERRY to join her and formed a partnership on April 1, 2020. Just before admission, KATY had the following assets and liability accounts: Cash - ?420,000; Accounts receivable -?380,000; Inventories -?250,000;Notes payable -?100,000. PERRY agreed to contribute cash equal to 30% of KATY's capital after considering the following adjustments: (a) 2% allowance for bad debts should be recognized, (b) the inventories have fair market value equal to 120% of the balance. How much should Perry contribute to the partnership?

a. ? 297,720
b. ? 302,280
c. ? 372,720
d. ? 285,000

Reference no: EM132771600

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