Reference no: EM133178025
Questions -
Q1. Adorable, Beautiful and Careful are partners who share profits and losses 5:3:2, respectively. They decided to liquidate their partnership. Below is the statement of financial position:
Cash 50,000
Other Assets 250,000
Accounts Payable 60,000
Adorable, Capital 80,000
Beautiful, Capital 90,000
Careful, Capital 70,000
The first sale of non-cash assets with book value of P150,000. At this time, the partnership paid creditors of P50,000 and liquidation expenses of P5,000. The partnership also withheld P10,000 for possible liquidation expenses. Beautiful received P48,000 in the first cash distribution.
How much is the proceeds from the sale of non-cash assets?
Q2. Mark admits Jimenez as a partner in the business. Balance sheet accounts of Mark just before the admission of Jimenez show: Cash, P26,000, accounts receivable, P120,000, merchandise inventory, P180,000, and accounts payable P62,000. It was agreed that for purposes of establishing Mark's interest, the following adjustments be made:
An allowance for doubtful accounts of 3% of accounts receivable is to be established;
Merchandise inventory is to be adjusted upward by P25,000; and
Prepaid expenses of P3,600 and accrued liabilities of P4,000 are to be recognized.
If Jimenez is to invest sufficient cash to obtain 2/5 equity in the partnership, How much would Jimenez contribute to the new partnership?