Reference no: EM132880732
Question - On January 1, 2020, the business assets and liabilities of John and Jones were as follows:
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John
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Jones
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Cash
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35,000
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90,000
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Receivables
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200,000
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600,000
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Inventories
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113,000
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172,000
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Land, buildings, and equipment
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650,000
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535,000
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Other assets
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2,000
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3,000
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Accounts payable
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180,000
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250,000
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Notes payable
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200,000
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350,000
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John and Jones agreed to form a partnership by contributing their net assets, subject to the following adjustments:
-Receivables of P20,000 in John's books and P40,000 in Jones' books are uncollectible.
-Inventories of P6,000 and P7,000 in the respective books of John and Jones are worthless.
-Other assets in the books are to be written off.
Required -
1. Upon the partnership's formation, the respective capital of partners John and Jones would be?
2. Under Bonus Method, if the partner agreed to have a capital ratio of 40:60 for John and Jones respectively, how much is the amount of bonus to or (from) John?
3. Under Bonus Method, if the partner agreed to have a capital ratio of 40:60 for John and Jones respectively, how much is the adjusted capital of Jones?
4. Under Bonus Method, if the partner agreed to have a capital ratio of 60:40 for John and Jones respectively and they further agreed to have a total capital of P1,500,000, how much is the amount of bonus to or (from) John?
5. Under Bonus Method, if the partner agreed to have a capital ratio of 60:40 for John and Jones respectively, and they further agreed to have a total capital of P1,500,000, how much is the adjusted capital of John?
6. If the partners agreed that John should withdraw or invest in order to have a capital ratio of 40%, how much should be the amount of additional investment or withdrawal?
7. If the partners agreed that John should withdraw or invest in order to have a capital ratio of 40%, how much is the adjusted capital of John and Jones?
8. If the partner agreed to revalue assets to maintain 40:60 capital ratio for John and Jones respectively, how much is the adjusted capital of John?
9. If the partner agreed to revalue assets to maintain 40:60 capital ratio for John and Jones respectively, how much is the adjusted capital of Jones?
10. If the partner agreed to effect revaluation down of assets to maintain 40:60 capital ratio for John and Jones respectively, how much is the adjusted capital of John?
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