Reference no: EM132473773
After the first quarter of the current year, Joy and Lucy, both proprietors, decide to combine their businesses and created a partnership. Prior to the partnership formation, their balance sheets show the following balances:
|
|
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Joy
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Lucy
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Cash
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P
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20,000
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P
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25,000
|
|
Accounts Receivable
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55,000
|
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30,000
|
|
Allowance for Doubtful Accounts
|
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5,000
|
|
2,500
|
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Inventoreis
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150,000
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145,650
|
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Store Equipment
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50,000
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|
|
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Accumulated Depreciation-S. Equipment
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5,000
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|
|
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Delivery Equipmet
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|
|
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80,000
|
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Accumulated Depreciation- Del. Equipment
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|
|
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16,000
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Furniture
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10,000
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7,500
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Accounts Payable
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35,000
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|
50,000
|
|
Notes Payable
|
|
10,000
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20,000
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|
Capital
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230,000
|
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199,650
|
The partners agreed on the following adjustments to their books:
Point 1: Both their Allowance for Doubtful Accounts will be increased by 4% of Account Receivable.
Point 2: Joy's inventories will be valued at P 145,000 while that of Lucy will be reduced by 10%.
Point 3: Store Equipment will be taken in the partnership books at book value.
Point 4: The Delivery Equipment and its contra-account will be taken up as is in the partnership books.
Point 5: The furniture will be taken at P8,000 and P5,000, respectively.
Point 6: Joy and Lucy will make an additional cash investment that will make their contributions equal to P250,000 each.
Point 7: They also agreed that a new set of books will be used by the partnership.
Instruction:
Question 1: Prepare the journal entries to record the partners contribution