Reference no: EM132847847
Question -
a. On October 20, 2020, CC admits DD for an interest in his business.
On this date, CC's capital account shows a balance of P202,770. The following were agreed upon before the formation of the partnership.
1. Prepaid expenses of P37,500 and accrued expenses of P5,500 are to be recognized.
2. 6% of the outstanding accounts receivable of P120,000 of CC is to be recognized as uncollectible.
3. DD is to be credited with a 30% interest in the partnership and is to invest cash aside from the P68,000 worth of merchandise.
The amount of cash to be invested by DD and the total capital of the partnership are______, respectively.
b. On March 31, 2020, Karen admits Lanie for an interest in his business. On this date, Karen's capital account shows a balance of P250,175. The following were agreed upon before the formation of the partnership.
1. Prepaid expenses of P11,200 and accrued expenses of P4,500 are to be recognized.
2. 4% of the outstanding accounts receivable of P90,000 of Karen is to be recognized as uncollectible.
3. Lani is to be credited with a 45% interest in the partnership and is to invest cash aside from the Equipment with a book value of P48,000 and a fair value of P46,500.
How much is the adjusted capital of Karen and the new capital of the partnership?