Reference no: EM133183403
Question - Roy and Gil are partners sharing profits and losses in the ratio of 1:2, respectively. On July 1, they decided to form the R & G Corporation by transferring the assets and liabilities of the partnership to the corporation in exchange for the latter's stock. The following is the post-closing trial balance of the partnership.
Cash Php 45,000
Accounts Receivable 60,000
Inventory 90,000
Fixed assets (net) 174,000
Liabilities 60,000
Roy, Capital 94,800
Gil, Capital 214,200
It was agreed that the adjustments be made to the following assets to be transferred to the corporation:
Accounts Receivable Php 40,000
Inventory 68,000
Fixed Assets 180,600
R&G Corporation was authorized to issue Php 100 par preferred stock and Php 10 par common stock. Roy and Gil agreed to receive for their equity in the partnership 720 shares of the common stock each, plus even multiple of 10 shares of preferred stock for their remaining interests.
1. What the total number of shares of preferred and common stocks issued by the corporation in exchange for the assets and liabilities of the partnership?
2. What the distribution of the stocks to Roy and Gil.