Reference no: EM132867897
Question - X and Y agreed to from a partnership. They also agreed to contribute th eir personal assets to the partnership. X has a note payable, and they also agreed that this payable would be assumed by the partnership.
X
Cash 200,000
Accounts Receivable 60,000
Inventory 90,000
Note Payable (50,000)
TOTAL 300,000
Y
Land 1,200,000
building 3,800,000
TOTAL 5,000,000
Additional Information:
1. All accounts that are included in accounts receivable can be collected.
2. The land has an unpaid mortgage of P20,000. The partners have agreed that neither the partnership nor any of them will assume that mortgage.
3. The building is overstated by P1,200,000.
4. There is no unpaid mortgage on the building.
5. The profit or loss sharing of the partners is 40:60 respectively.
6. Assume that the capital ratio is the same as the profit or loss ratio.
REQUIRED -
1. Compute the adjusted capital of X and Y using the bonus method.
2. Prepare the journal entries to record the contributions.
3. Compute the amount of bonus.