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How much cash should Clara invest

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Reference no: EM132819914

Question - Clara and Eba agree to form a partnership on May 1. Eba contributed the following items coming from her sole-proprietor-owner music store:

Merchandise Inventory - cost of P120,000; current fair value of P100,000,

Equipment - cost of P500,000; book value of P350,000, current fair value of P300,000;

Note payable in purchasing the equipment P150,000 will be assumed by the partnership.

Clara contributed Furniture and Fixtures which was purchased by Clara two years ago for P500,000 but which current market value is only 50% of the cost.

Required -

a. If the partners agree that equity will be 40% for Eba and 60% for Clara, how much cash should Clara invest?

b. Give two entries in the partnership books to record the investments of Eba and Clara.

Reference no: EM132819914

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