Reference no: EM132796595
Question - Accounting for Partnership - The partnership of Red and White admits Blue as a partner on January 1, 20CY. The partnership has the following balances on December 31, 20PY:
Red and White Partnership Balance Sheet December 31, 20PY
Assets
Cash 450,000
Other Assets 5,500,000
Total Assets P 5,950,000
Liabilities and Owner's Equity
Accounts Payable P2,500,000
Red, Capital 2,250,000 White, Capital 1,200,000
Total Liabilities and Owner's Equity P5,950,000
Profits and losses for Red is 60% and 40% for White, respectively.
Requirements -
1. Suppose Blue pays White P1,500,000 to buy out White. Red approves Blue as a partner.
a. Record the transfer of equity on the partnership books on January 1, 20CY.
b. Prepare the partnership balance sheet immediately after Blue is admitted as a partner.
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