Reference no: EM132887042
Question - Gloria Detoya and Esterlina Gevera have operated a successful partnership for many years, sharing profit and losses equally. Evangelina Madelo is to be admitted to the partnership on June 1 of the current year, in accordance with the following agreement:
a. Assets and liabilities of the old pertnership are to be valued at their book values as of May 31, except for the following:
-Accounts receivable amounting to P 20,000 are to be written off, and the allowance for uncollectible accounts is to be increased to 5% of the reamaining accounts.
-Merchandise inventory is to be valued at P 638,700
-Equipment is to be valued at P 900,000.b. Madelo is to purchase P 300,000 of the ownership interest of Gevera for P 375,000 cash and to contribute P 350,000 cash to the partnership for a total ownership equity of P 650,000.
c. The income-sharing ratio of Detoya, Gevera, and Madelo is to be 2:1:1
The post-closing trial balance of Detoya and Gevera as of May 31 follows:
Detoya and Gevera Post-Closing Trial Balance May 31, 2018
Debit Credit
Cash 95,000
Accounts Receivable 214,000
Allowance for Uncollectible Accounts 5,000
Merchandise Inventory 586,000
Prepraid Insurance 35,000
Equipment 950,000
Accumulated Depreciatetion-Equipment 257,000
Notes Payable 120,000
Accounts Payable 148,000
Detoya, Payable 750,000
Gevera, Capital 600,000
1,880,000 1,880,000
Required - Prepare the balance sheet for the new partnership as at June 1, 2018?