Reference no: EM133065866
Question - Celine has successfully operated a sari-sari store for several years. She wishes to expand the business, but to do so she needs additional capital, which she is unable to supply. She therefore enters into an agreement with Emman to reorganize and continue her business as a partnership called "CE Partnership." The partners agree that after revaluation of certain assets, is to invest her ongoing business in the partnership and additional cash from her personal assets to bring her total investment to Php 50,000.
Emman is to contribute a computer costing Php 30,000 with a FMV of Php 25,000, merchandise inventory worth Php 10,000 and cash capital sufficient to make his total investment equal to that of Celine. The accumulated depreciation of the computer is Php 8,000.
The post-closing trial balance of Celine just prior to the formation of the partnership appeared as follows:
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Debit
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Credit
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Cash
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2,000
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Accounts Receivable
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5,000
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Merchandise Inventory
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10,000
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Store Equipment
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8,000
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Accum depreciation-SE
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1,600
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Account Payable
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6,400
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Celine, Capital
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17,000
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25,000
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25,000
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The partners agree to adjust the books of Celine as follows: The realizable value of accounts receivable is 80%, the merchandise inventory should be revalued at Php 9,000 and the accumulated depreciation should be increased to Php 3,000.
Required -
a. Journalize adjustments in the books of Celine.
b. Close the books of Celine.
c. Record the investments in the CE Partnership's books.
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: The accumulated depreciation of the computer is Php 8,000. Journalize adjustments in the books of Celine. Close the books of Celine
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