Reference no: EM132622419

Question - On May 1, 2020, the business assets and liabilities of LONZO and BRANDON were as follows:

LONZO BRANDON

Cash P 28,000 P 62,000

Receivables 200,000 600,000

Inventories 120,000 200,000

Land, buildings, and equipment 650,000 535,000

Other assets 2,000 3,000

Accounts payable (180,000) (250,000)

Notes payable (200,000) (350,000)

LONZO and BRANDON agreed to form a partnership by contributing their net assets, subject to the following adjustments:

Receivables of P 20,000 in LONZO's books and P 40,000 in BRANDON's books are uncollectible

Inventories of P 6,000 and P 7,000 in the respective books of LONZO and BRANDON are worthless.

Other assets in both books are to be written off.

REQUIREMENT -

1. Upon the partnership's formation, the respective capital of partners LONZO and BRANDON would be?

2. Under the Bonus Method, if the partner agreed to have a capital ratio of 40:60 for LONZO and BRANDON respectively, how much is the amount of bonus to or (from) LONZO?

3. Under the Bonus Method, if the partner agreed to have a capital ratio of 40:60 for LONZO and BRANDON respectively, how much is the adjusted capital of BRANDON?

4. Under the Bonus Method, if the partner agreed to have a capital ratio of 60:40 for LONZO and BRANDON respectively and they further agreed to have a total capital of P 1,500,000, how much is the amount of bonus to or (from) LONZO?

5. Under the Bonus Method, if the partner agreed to have a capital ratio of 60:40 for LONZO and BRANDON respectively, and they further agreed to have a total capital of P 1,500,000, how much is the adjusted capital of LONZO?

6. If the partners agreed that LONZO 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 LONZO should withdraw or invest in order to have a capital ratio of 40%, how much is the adjusted capital of LONZO and BRANDON?

8. If the partner agreed to revalue assets to maintain 40:60 capital ratio for LONZO and BRANDON respectively, how much is the adjusted capital of LONZO?

9. If the partner agreed to revalue assets to maintain 40:60 capital ratio for LONZO and BRANDON respectively, how much is the adjusted capital of BRANDON?

10. If the partner agreed to effect revaluation down of assets to maintain 40:60 capital ratio for LONZO and BRANDON respectively, how much is the adjusted capital of LONZO?

11. If the partner agreed to effect revaluation down of assets to maintain 40:60 capital ratio for LONZO and BRANDON respectively, how much is the adjusted capital of BRANDON?