On June 30, 2021, William and Bryan formed a partnership. The partners agreed to invest equal amounts of capital. William invested his proprietorship’s assets and liabilities as follows: Book Value Fair Market Value Accounts Receivable Php 720,000 Php 720,000 Allowance for Doubtful Accounts - 0 - 100,500 Merchandise Inventory 233,000 241,000 Prepaid Expenses 117,000 117,000 Office Equipment 459,000 276,000 Accumulated Depreciation 153,000 - 0 - Accounts Payable 191,000 191,000 On June 30, 2021, Bryan invested cash, an amount that is equal to current fair market value of William’s partnership Capital. William, being the managing partner of the partnership, he will earn two-thirds (2/3) of the partnership profit. Bryan agreed to accept one-third of the profit. During the remainder of the year, the partnership earned Php 450,000. The temporary withdrawals or drawing of William and Bryan were Php 352,000 and Php 230,000 respectively. 1. Prepare the journal entries to record the initial investments of William and Bryan in the new set of Books of Accounts of the WB Partnership. 2. Prepare the WB Partnership Balance Sheet immediately after its formation on June 30, 2021. 3. Prepare the profit / loss distribution schedule based on their agreed upon profit and loss ratio. 4. Prepare the journal entries to close the income summary and the drawing accounts of William and Bryan.
On June 30, 2021, William and Bryan formed a
amounts of capital. William invested his proprietorship’s assets and liabilities as follows:
Book Value Fair Market Value
Accounts Receivable Php 720,000 Php 720,000
Allowance for Doubtful Accounts - 0 - 100,500
Merchandise Inventory 233,000 241,000
Prepaid Expenses 117,000 117,000
Office Equipment 459,000 276,000
Accounts Payable 191,000 191,000
On June 30, 2021, Bryan invested cash, an amount that is equal to current fair market value of
William’s partnership Capital. William, being the managing partner of the partnership, he will earn
two-thirds (2/3) of the partnership profit. Bryan agreed to accept one-third of the profit.
During the remainder of the year, the partnership earned Php 450,000. The temporary withdrawals or
drawing of William and Bryan were Php 352,000 and Php 230,000 respectively.
1. Prepare the
of Books of Accounts of the WB Partnership.
2. Prepare the WB Partnership Balance Sheet immediately after its formation on June 30, 2021.
3. Prepare the profit / loss distribution schedule based on their agreed upon
4. Prepare the journal entries to close the income summary and the drawing accounts of William
and Bryan.
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