Reference no: EM132626112

Rodrigo and Sandoval each operating a separate business agreed to join in partnership as of January 2, 2005. The following are the given accounts:

                                             Rodrigo                     Sandoval

Cash                              P11,200                     P42,000

Accounts Receivable             P112,000                   P84,000

Merchandise                         P140,000                   126,000

Office Equipment                        35,000                    42,000

Accounts Payable                       35,000                    56,000

Notes payable                             7,000                     --------

The assets of the two partners were carefully examined and it was agreed that certain adjustments be made and the above accounts as adjusted be the basis on which the partnership begins operations. The adjustments agreed upon are as follows: Rodrigo's accounts receivable are to be taken over at a book value less 15% and Sandoval's accounts receivable at book value less 10%. Rodrigo's office equipment is new and is considered adequate for the new business; therefore, it is decided that Sandoval dispose of his equipment at the highest cash price possible and that Rodrigo bear one-fourth of the loss resulting from the sale. Sandoval's office equipment is disposed of at book value less 10%. It is further agreed that Sandoval pay sufficient cash to give him one-half interest in the business after charging to Rodrigo's capital account his share of the loss on the sale by Sandoval of office equipment.

Problem 1: How much additional cash is to be contributed by Sandoval?