A admits B as a partner in business. Accounts in ledger for A on October 31, 2021, just before the admission of B show the following balances: Cash: 50,000 Accounts Receivable: 110,000 Notes Receivable: 20,000 Inventories: 50,000 Accounts Payable: 30,000 It is agreed that for the purposes of establishing A's interest, the following adjustments shall be made: An allowance for doubtful accounts of 5% of accounts receivable is to be established. An inventory amounting to 10,000 is worthless. Prepaid expenses of 1,000 and accrued expense of 2,000 are to be recognied. An interest of 10% on notes receivable amounting 10,000 dated April 30,2020 is to be accrued. B is to invest sufficient cash to obtain a 1/4 interest in the partnership. Determine the amount of cash investment by Partner B.
A admits B as a partner in business. Accounts in ledger for A on October 31, 2021, just before the admission of B show the following balances: Cash: 50,000 Accounts Receivable: 110,000 Notes Receivable: 20,000 Inventories: 50,000 Accounts Payable: 30,000 It is agreed that for the purposes of establishing A's interest, the following adjustments shall be made: An allowance for doubtful accounts of 5% of accounts receivable is to be established. An inventory amounting to 10,000 is worthless. Prepaid expenses of 1,000 and accrued expense of 2,000 are to be recognied. An interest of 10% on notes receivable amounting 10,000 dated April 30,2020 is to be accrued. B is to invest sufficient cash to obtain a 1/4 interest in the partnership. Determine the amount of cash investment by Partner B.
Chapter4: Gross Income: Concepts And Inclusions
Section: Chapter Questions
Problem 21CE
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A admits B as a partner in business. Accounts in ledger for A on October 31, 2021, just before the admission of B show the following balances:
Cash: 50,000
Accounts Receivable: 110,000
Notes Receivable: 20,000
Inventories: 50,000
Accounts Payable: 30,000
It is agreed that for the purposes of establishing A's interest, the following adjustments shall be made:
- An allowance for doubtful accounts of 5% of accounts receivable is to be established.
- An inventory amounting to 10,000 is worthless.
- Prepaid expenses of 1,000 and accrued expense of 2,000 are to be recognied.
- An interest of 10% on notes receivable amounting 10,000 dated April 30,2020 is to be accrued.
B is to invest sufficient cash to obtain a 1/4 interest in the
Determine the amount of cash investment by Partner B.
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