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Problem 1 4

The document is a word problem from an accounting course involving the formation of a partnership between Tan, a sole proprietor, and Tiu, an individual. It provides the statement of financial position of Tan's sole proprietorship as of April 8, 2021, including assets of $388,000 and capital of $352,000. The conditions for forming the partnership state that accounts receivable will be estimated at 70% collectible, accumulated depreciation on equipment will increase by $10,000, accounts payable will be assumed, and Tiu will contribute cash to make the partner's capital balances proportionate to the 40:60 profit/loss ratio.

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196 views1 page

Problem 1 4

The document is a word problem from an accounting course involving the formation of a partnership between Tan, a sole proprietor, and Tiu, an individual. It provides the statement of financial position of Tan's sole proprietorship as of April 8, 2021, including assets of $388,000 and capital of $352,000. The conditions for forming the partnership state that accounts receivable will be estimated at 70% collectible, accumulated depreciation on equipment will increase by $10,000, accounts payable will be assumed, and Tiu will contribute cash to make the partner's capital balances proportionate to the 40:60 profit/loss ratio.

Uploaded by

Olaysa Bacus
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Republic of the Philippines

City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

Problem 1-4 (A Sole Proprietor and an Individual with no Business Form a Partnership)
On Apr 8, 2021, Tan who has her own retail business and Tiu, decided to form a partnership wherein
they will divide the profits in the ratio of 40:60, respectively. The statement of financial position of Tan
is as follows:
Tan Company
Statement of Financial Position
Apr 8, 2021

Assets
Cash 4,000
Accounts Receivables 160,000
Less: Allow for Bad Debts 16,000 144,000
Inventory 200,000
Equipment 50,000
Less: Acc. Depreciation 10,000 40,000
Total Assets 388,000

Liabilities and Equity


Accounts Payable 36,000
Tan, Capital 352,000
Total Liabilities and Equity 388,000

Conditions agreed upon before the formation of the partnership:


a. The accounts receivable of Tan is estimated to be 70% realizable.
b. The accumulated depreciation of the equipment will be increased by P 10,000.
c. The accounts payable will be assumed by the partnership.
d. The capital of the partnership is based on the adjusted capital balance of Tan. Tiu is to contribute
cash in order to make the partner’s capital balances proportionate to the profit and loss ratio.

Required:
1. Prepare the necessary journal entries in all the books to record the formation of the partnership
if a new set of books will be used.
2. Prepare the statement of financial position of the partnership.

Fundamentals of Accounting Part II – 2nd Semester AY 2020-2021


NOT FOR SALE EXCLUSIVE FOR GORDON COLLEGE ONLY

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