M and O decide to form a partnership on June 1, 2020. The partnership will take over their assets as well as assume their liabilities. As of June 1, 2020, the net assets of M and O are P220,000 and P309,375 respectively. Liabilities of M are 55% less than the value of its net assets while liabilities of O are 40% more than the value of its net assets. The partners agreed on a 25:75 profit and loss ratio. Further, the partners arrive at the following agreements: • M's inventory is undervalued by P11,000 • Allowance for doubtful accounts is to be set up in the books of M and O at 10% of the AR balances (M P27,500 and O P41,250) Accrued salaries of P20,250 was not recognized in the books of . How much cash should M invest/(withdraw) so that their capital interest would be equal to their P/L ratio? 95,000 133,250 O (133,250) (95,000)

M and O decide to form a partnership on June 1, 2020. The partnership will take over their assets as well as assume their liabilities. As of June 1, 2020, the net assets of M and O are P220,000 and P309,375 respectively. Liabilities of M are 55% less than the value of its net assets while liabilities of O are 40% more than the value of its net assets. The partners agreed on a 25:75 profit and loss ratio. Further, the partners arrive at the following agreements: • M's inventory is undervalued by P11,000 • Allowance for doubtful accounts is to be set up in the books of M and O at 10% of the AR balances (M P27,500 and O P41,250) Accrued salaries of P20,250 was not recognized in the books of . How much cash should M invest/(withdraw) so that their capital interest would be equal to their P/L ratio? 95,000 133,250 O (133,250) (95,000)

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter15: Partnership Accounting

Section: Chapter Questions

Problem 3EA: The partnership of Tasha and Bill shares profits and losses in a 50:50 ratio, and the partners have...

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The partnership of Tasha and Bill shares profits and losses in a 50:50 ratio, and the partners have capital balances of $45,000 each. Prepare a schedule showing how the bonus should be divided if Ashanti joins the partnership with a $60,000 investment. The partners new agreement will share profit and loss in a 1:3 ratio.
MN and OP decided to form a partnership on June 01, 2020. The partnership will take over their assets as well as assume their liabilities. As of June 01, 2020, the net assets of MN and OP are P220,000 and P309,375 respectively. Liabilities of MN are 55% less than book value of its net assets while liabilities of OP are 40% more than the book value of its net assets. The partners agreed on a 25:75 profit and loss ratio. Furthermore, the partners arrived on the following agreements: MN’s inventory is undervalued by P11,000. An allowance for doubtful accounts is to be set-up in the books of MN and OP at 10% of the accounts receivable balances (AR balances: MN, P27,500; OP, P41,250). Accrued salary of P20,250 was not recognized in OP’s books. What is the total asset of the partnership immediately after formation if partner’s capital interest should be equal to their profit and loss ratio through withdrawal of excess cash investment by one of the partners?
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