Reference no: EM133108475
Question - AA admits BB as a partner in business. Accounts in the ledger for AA on November 30, 2021, just before the admission of BB, show the following balances:
Cash P6,800
Accounts receivables 15,200
Merchandise inventory 20,000
Accounts payable 8,000
AA, capital 34,000
It is agreed that the purposes of establishing AA's interest, the following adjustments shall be made:
(a) An allowance for doubtful accounts of 3% of accounts receivable is to be established.
(b) The merchandise inventory is to be valued at P23,000.
(c) Prepaid salary expenses of P600 and accrued rent expense of P800 are to be recognized.
BB is to invest sufficient cash to obtain a 1/2 interest in the partnership.
(1) Compute the AA's adjusted capital before the admission of BB?
(2) Compute the amount of cash investment by BB.