Find what amount will each partner capital be recorded

Assignment Help Financial Accounting

Reference no: EM132641429

Payton Allen

Cash P100,000 50,000

Building 400,000

On October 31,2019. Payton and Allen formed a partnership called Beyond the Arc with each partner contributing the following items at cost:

Inventory 200,000

Mortgage Payable 200,000

Accounts Payable 150,000

The partners agreed that the building and inventory should be recorded at fair value of P500,000 and P300,000 respectively. They have also agreed that the capital interests would be equal through the bonus method. Profit sharing will also be equal between the two partners.

Problem 1: At what amount will each partner's capital be recorded upon formation?

Option 1: Payton - P400,000; Allen - P200,000

Option 2: Payton - P300,000; Allen - P100,000

Option 3: Payton - P200,000; Allen - P200,000

Option 4: Payton - P300,000; Allen - P300,000

Reference no: EM132641429

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