Reference no: EM132705272
Question - On June 30, San Mateo and Caballes formed a partnership. The partners agreed to invest equal amounts of capital. San Mateo invested his proprietorship's assets and liabilities as follows:
San Mateo's Book Value Fair Market Value
Accounts Receivable P72000 P72000
Allowance for Uncollectible Accounts - 10500
Merchandise Inventory 223400 241000
Prepaid Expenses 17000 17000
Office Equipment 459000 276000
Accumulated Depreciation 153000 -
Accounts Payable 191000 191000
On June 30, Caballes invested cash in an amount equal to the current market value of San Mateo's partnership capital.
San Mateo, the managing partner, would earn two-thirds of partnership profits. Caballes agreed to accept one-third of the profits.
During the remainder of the year, the partnership earned P450000. The temporary withdrawals of San Mateo and Caballes were P352000 and P230000, respectively.
Required -
1. Journalize the partners' initial investment in new set of books.
2. Prepare the partnership's statement of financial position immediately after its formation on June 30.
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