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Assignment 2.1 Accounting

- Steve and Guy agreed to combine their businesses, a health store and beauty salon, into a new company called Health and Beauty Shop. - Before combining, they reviewed their assets and liabilities, making adjustments such as writing off $10,000 of obsolete goods and recognizing $5,000 of doubtful accounts. - After adjustments, Steve's net asset contribution was $112,500 and Guy's was $106,000, which will be their initial capital balances in the new partnership.

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Coline Dueñas
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346 views7 pages

Assignment 2.1 Accounting

- Steve and Guy agreed to combine their businesses, a health store and beauty salon, into a new company called Health and Beauty Shop. - Before combining, they reviewed their assets and liabilities, making adjustments such as writing off $10,000 of obsolete goods and recognizing $5,000 of doubtful accounts. - After adjustments, Steve's net asset contribution was $112,500 and Guy's was $106,000, which will be their initial capital balances in the new partnership.

Uploaded by

Coline Dueñas
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 XLSX, PDF, TXT or read online on Scribd
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Steve owns a store selling health products and Guy owns a beauty salon.

They agree to combine their bus


Steve Guy
Cash  25,000 11,000
Accounts Receivable 
25,000
Merchandise I 80,000
Supplies Inve 15,000 25,000
Furniture and Equipment 
50,000 85,000
Accounts Payable  20,000 5,000
Notes Payable  30,000

The partners agreed to the following conditions:


a. P5,000 doubtful accounts/bad debts  should be recorded 
b. Furniture and Equipment should be at the market value of P35,000 for the health store and P70,000 for
c. P10,000 obsolete goods should be written off 
d. Beauty supplies should only be 15,000
e. Interest Payable should be recognized for P2,500

STEVE HEALTH STORE


BOOK VALUE ADJUSTMENTS ADJUSTED VALUE
DEBIT CREDIT DEBIT CREDIT DEBIT
CASH 25,000 25,000
BAD DEBTS 5,000
ACCOUNT RECEIVABLE 25,000 25,000
MERCHANDISE INVENTORY 80,000 10,000 70,000
SUPPLIES INVENTORY 15,000 15,000
FURNITURE & EQUIPMENT 50,000 15,000 35,000
ACCOUNTS PAYABLE 20,000
NOTES PAYABLE/ INTEREST PAYABLE 30,000 2,500
170,000

a. P5,000 doubtful accounts/bad debts  should be recorded 


b. Furniture and Equipment should be at the market value of P35,000 for the health store and P70,000 for the beauty salon  
c. P10,000 obsolete goods should be written off 
d. Beauty supplies should only be 15,000
e. Interest Payable should be recognized for P2,500

GUY BEAUTY SALON


BOOK VALUE ADJUSTMENTS ADJUSTED VALUE
DEBIT CREDIT DEBIT CREDIT DEBIT
CASH 11,000 11,000
BAD DEBTS 5,000
SUPPLIES INVENTORY 25,000 10,000 15,000
FURNITURE & EQUIPMENT 85,000 10,000 70,000
ACCOUNTS PAYABLE 5,000
96,000

a. P5,000 doubtful accounts/bad debts  should be recorded 


b. Furniture and Equipment should be at the market value of P35,000 for the health store and P70,000 for the beauty salon  
c. P10,000 obsolete goods should be written off 
d. Beauty supplies should only be 15,000
e. Interest Payable should be recognized for P2,500
gree to combine their businesses and call it Health and Beauty Shop. Prior to the combination they agree to review t

th store and P70,000 for the beauty salon  

ADJUSTED VALUE
CREDIT

5,000

20,000
32,500
57,500 112,500 net asset contribution of Steve

CASH 25000
70,000 for the beauty salon   ACCOUNT RECEIVABLE 25000
MERCHANDISE INVENTORY 70,000 Adjusted 80,000 - 10,000 obsolete
SUPPLIES INVENTORY 15,000
FURNITURE & EQUIPMENT 35,000 Adjusted 50,000 - 15,000 decrease m.v

BAD DEBTS 5000


ACCOUNTS PAYABLE 20,000
NOTES PAYABLE 32,500 Notes payable + interest pay
Steve Capital = 112,500 net asset contribution of Steve

ADJUSTED VALUE
CREDIT

5,000

5000
10000 106,000 net asset contribution of Guy

CASH 11,000
SUPPLIES INVENTORY 15,000 Adjusted 25,000 - 10,000 = 15,000 supp
FURNITURE & EQUIPMENT 70,000 Adjusted 80,000 - 10,000 decrease m.v
70,000 for the beauty salon  
ACCOUNTS PAYABLE 5,000
BAD DEBTS 5000
Guy Capital = 106,000 net asset contribution
on they agree to review the assets and liabilities and make some necessary adjustments. The following accounts are

80,000 - 10,000 obsolete

50,000 - 15,000 decrease m.v

Notes payable + interest payable


contribution of Steve
25,000 - 10,000 = 15,000 supplies
80,000 - 10,000 decrease m.v

of Guy
The following accounts are found in their statements of financial position:

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