1

8
9

10
Enumerate the different forms of business organizations based on
a.) ownership
b.) activity undertaken

What is a partnership?

What are the different characteristics of a partnership?

What may be contributed in a partnership business when formed?

What may be the purpose/s that a partnership is formed?

Enumerate the different classification of a partnership form of business.

Enumerate the different classification of partners.

Enumerate the different advantages and disadvantages of a partnership form of business.

What is an article of co-partnership? What are the different information included in the articles of co-partnership

What is the meaning of partner's equity?

 ANSWERS
Ownership:
Sole Proprietorship
Partnership
Corporation
Limited Liability Company (LLC)

Activity Undertaken:
Service
Manufacturing
Merchandising

Partnership is form of business that involves two or more persons in the ownership of the business. Having a partne
entails making decisions together, sharing the expenses and profits. But there are some partnership that has limited

The characteristics of a partenrship are: Contractual Relationship, Two or More Persons, Existence of Business, Earn
Extent of Liability, Mutual Agency, Implied Authority, Restriction on the Transfer of Share, Utmost Good Faith, No Se

In a business partnership a partner can contribute cash, ideas, time, and capital.

A partnership agreement's goal is to protect the owner's investment in the firm, to control how the company will be
partners' rights and obligations, and to establish the rules of engagement in the event of a disagreement between th

The different classifications of parternship are: general partnerships, limited partnerships, joint liability partnershi
several liability partnerships, and limited liability partnerships.

The different classifications of partners are: Working Partner, Sleeping Partner, Nominal Partner, Partner by Estop
Partner by Holding Out, Sub – Partner, Partner in Profit

ADVANTAGES
1. As a result of sharing responsibilities, The proprietor is not required to do everything.
2. A broader skill set, experience and knowledge.
3. Each partner will have lower start-up costs.
4. Additional funds to expand the company.
5. Increased borrowing capacity from a bank or other financial institution.
6. Employees who perform well can be being recognized as partners.
The basis for forming a partnership is the Articles of Partnership. Articles of partnership are contractual agreements
pool labor, cash, and loss sharing. The different information are:
1) the name of the partnership,
2) the names, addresses of the partners, classes of partners stating whether the partner is a general or a limited par
3) the effective date of the contract,
4) the purpose and principal place of business of the partnership,
5) the investments each partner will make in the business stating the contributions of each of the partners,
6) the rights and duties of each of the partners,
7) the allocation and distribution of profits (and losses) among the partners,
8) the conditions under which the partners may withdraw money or other assets,
9) the manner of keeping the books of accounts,
10) the method of decision making such as the causes for dissolution and the provision for arbitration in settling disp

A partner's proportional interest in partnership assets is referred to as partnership equity. In other terms, partnersh
d Dissolution

rly describe the

ner, Secret Partner

DISADVANTAGES
1. For your portion of the company's debts, you have unlimited liability.
2. Potential conflicts and disagreements between partners and management.
3. Finding an equitable and fair allocation. If one or more of the partners departs the company, you'll need a strateg
4. Loss of Autonomy
ss partners that

artner's share
 Account Title Debit Credit
Cash in Bank 281,175
Petty Cash Fund 10,000
Accounts Receivable 219,000
Allowance for Bad Debts 21,900
Notes Receivable 40,000
Advances to Employees 7,500
Interest Receivable 400
Sewing Supplies on Hand 23,500
Land 700,000
Buildings 800,000
Accumulated Depreciation-Building 250,000
Sewing and Designing Equipment 550,000
Accumulated Depreciation-Sewing and Designing
Equipment 100,000

Shop Equipment 480,000

Accumulated Depreciation-Shop Equipment 281,250
Furniture and Fixture 400,000
Accumulated Depreciation – Furniture and Fixture 185,000
Accounts Payable 68,500
Unearned Service Income 105,845
Utilities Payable 7,200
Withholding Taxes Payable 12,500
Notes Payable due in 3 years 120,000
Charito, Capital 2,359,380
Totals 3,511,575 3,511,575

Exercise 2-7

Account Title Debit Credit

Cash 46,000
Accounts Receivables 65,000
Allowance for Bad Debts 5,000
Office Supplies 7,000
Office Equipment 110,000
Accumulated Depreciation - Office Equipment 25,000
Furniture and Fixtures 62,000
Accumulated Depreciation -Furniture & Fixtures 12,000
Accounts Payable 24,000
Romy, Capital 224,000
Total 290,000 290,000

Account Title Debit Credit

Cash 38,000
Accounts Receivable 45,000
Allowance for Bad Debts Office Supplies
3,000
Office Supplies 14,000
Office Equipment 98,000
Accumulated Depreciation-Office Equipment 22000
Furniture and Fixtures 32,000
Accumulated Depreciation-Furniture & Fixtures 6,000
Notes Payable 10,000
Accounts Payable 8,000
Argem, Capital 178,000
Total 227,000 227,000

Exercise 2-8
Account Title Debit Credit
Cash 400,000
Accounts receivable 80,000
Delivery Equipment (at cost) 350,000
Office Equipment (at cost) 140,000
Furniture and fixtures (at cost) 80,000
Accounts payable 30,000
Martin, Capital 1,020,000
Total 1,050,000 1,050,000
 page 10
DATE PARTICULARS P/R DEBIT CREDIT
2020 REVALUATION OF ASSETS Allowance for Bad Debts
Mar. 1 Francis, Capital 5,000
Allowance for Bad Debts 5,000
Increased amount of possible uncollectible accounts

1 Francis, Capital 2,000 Francis, Capital

Office Supplies 2,000 5,000
Revaluation of Office Suppplies 2,000
3,000
1 Francis, Capital 3,000
Accumulated Depreciation - Office Equipment 2,000
Accumulated Depreciation - Furnitures and Fixtures 1,000
Revalue of assets based on appraised valuation Office Suppplies
8,000
CLOSING THE BOOKS OF SOLE PROPRIETORSHIP
1 Allowance for Bad Debts 10,000 10,000
Accumulated Depreciation - Office Equipment 10,000
Accumulated Depreciation - Furnitures and Fixtures 3,000
Accounts Payable 18,000
Notes Payable in 2 years 12,000
Francis, Capital 230,000
Cash 87,000
Accounts Receivable 70,000
 Notes Receivable 20,000
Office Supplies 6,000
Office Equipment 80,000
Furnitures and Fixtures 20,000
To close the books of sole proprietorship business

PARTNERSHIP BOOKS (Initial investment of partners)

1 Cash 607,000 Cash
Accounts Receivable 70,000 607,000
Notes Receivable 20,000 490,000
Office Supplies 6,000 1,097,000
Office Equipment 70,000
Furnitures and Fixtures 17,000 Office Suppplies
Allowance for Bad Debts 10,000 6,000
Accounts Payable 18,000 10,000
Notes Payable in 2 years 12,000 16,000
Francis, Capital 750,000
Investment of Francis Office Equipment
70,000
1 Cash 490,000 250,000
Office Supplies 10,000 320,000
Office Equipment 250,000
Anthony, Capital 750,000
Investment of Anthony
1 Transportation Vehicle 750,000
Roque, Capital 750,000
Investment of Roque
llowance for Bad Debts Accumulated Depreciation - Office Equipment
5,000 8,000
5,000 2,000
10,000 10,000

Francis, Capital Accumulated Depreciation - Furniture & Fixture

240,000 2,000
1,000
3,000

230,000

Office Suppplies
2,000
 Cash

Office Suppplies

Office Equipment
 Francis and Friends Law Office
Statement of Financial Position
March 2, 2020
ASSETS
Current Assets
Cash ₱1,097,000
Trade receivables (Note 1) 80,000
Office Supplies 16,000 ₱1,193,000

Non-Current Assets
Property, Plant Equipment (Note 2) 1,087,000
Total Assets ₱2,280,000

LIABILITIES AND PARTNERS' EQUITY

Current Liabilities
Accounts Payable ₱18,000
Non-Current Liabilities
Notes Payable due in 2 years 12,000
Total Liabilities ₱30,000

Partners' Equity
Francis, Capital 750,000
Anthony, Capital 750,000
Roque, Capital 750,000 2,250,000
Total Equity ₱2,250,000

Total Liabilities and Partner's Equity ₱2,280,000

Computational Notes to the Financial Statement

Note 1: Trade and Other Receivables
Accounts Receivable ₱70,000
Allowance for Doubtful Accounts ₱10,000 ₱60,000
Notes Receivable ₱20,000
Total Trade and Other Receivables ₱80,000

Note 2: Property, Plant and Equipment

Transportation Equipment ₱750,000
Office Equipment ₱320,000
Furniture and Fixture ₱17,000
Total Carrying Value ₱1,087,000
Excerise 2-1 Identification

1) Partnership
2) Industrial Partner
3) General Partnership
4) Nominal Partner
5) Mutual Agency
6) Articles of Co-Partnership
7) General Partner
8) Universal partnership of all present property
9) Fair Market Value
10) Memorandum Entry

Exercise 2-2 True or False

1) 0
2) 0
3) 1
4) 0
5) 0
6) 0
7) 1
8) 1
9) 1
10) 1
 Page 1 CASE C
DATE PARTICULARS P/R DEBIT CREDIT
CASE A
2020
July 1 Cash 500,000
Office Equipment 45,000 Current Assets
Rose, Capital 545,000

1 Furniture and Fixtures 100,000

Guada, Capital 100,000 Non-Current Assets

Total Assets
1 Memorandum Entry:
Marie is admitted as an Industrial
Partner Partners' Equity

CASE B
2020
May 1 Building 1,500,000 Total Partners' Equity
Office Equipment 30,000
Mortgage, Payable 300,000
Romy, Capital 1,230,000 Computa
Investment of Romy Note 1: Trade Receivabl
 Accounts Receivable
1 Cash 550,000 Allowance for Doubtful
Office Equipment 220,000 Total Trade Receivables
Furniture and Fixtures 50,000
Vic, Capital 820,000 Note 2: Property, Plant a
Office Equipment
Furnitures and Fixtures
Total Carrying Value
CASE C
RGM Partnership
Statement of Financial Position
July 4, 2020
ASSETS
Current Assets
Cash P 205,000
Trade receivables (Note 1) 85,000
Office Supplies 12,000 P 302,000

Non-Current Assets
Property, Plant and Equipment (Note 2) 460,000
Total Assets P 762,000

PARTNERS' EQUITY
Partners' Equity
Rosario, Capital P 320,000
Guadalupe, Capital 225,000
Maria, Capital 217,000
Total Partners' Equity P 762,000

Computational Notes to the Financial Statement

Note 1: Trade Receivables
Accounts Receivable P 95,000
Allowance for Doubtful Accounts 10,000
Total Trade Receivables P 85,000

Note 2: Property, Plant and Equipment

Office Equipment P 320,000
Furnitures and Fixtures 140,000
Total Carrying Value P 460,000
 DATE PARTICULARS P/R DEBIT CREDIT
2020 REVALUATION
Oct 1 Francis, Capital 2,800
Allowance for Bad Debts 2,800
Increase of allowance for bad debts by 1.5% of accounts receivable

1 Landscaping Supplies 10,000

Francis, Capital 10,000
Revaluation of landscapping supplies

1 Francis, Capital 100,000

Accumulated Depreciation - Furniture and Fixtures 100,000
Revaluation of assets based on appraised valuation

CLOSING THE BOOKS OF SOLE PROPRIETORSHIP

1 Allowance for Bad Debts 10,800
Accumulated Depreciation 200,000
Accounts Payable 565,000
Francis, Capital 1,634,200
Cash 130,000
Accounts Receivable 720,000
Landscaping Supplies 560,000
 Furniture and Equipment 1,000,000
To close the boooks of existing sole proprietorship business

PARTNERSHIP BOOKS
1 Cash 130,000
Accounts Receivable 720,000
Landscaping Supplies 560,000
Furniture and Equipment 800,000
Allowance for Bad Debts 10,800
Accounts Payable 565,000
Francis, Capital 1,634,200
Initial Investment of Francis

1 Cash 1,634,200
Pio, Capital 1,634,200
Initial Investment of Pio

-
 Allowance for Bad Debts Francis and Pio Limited
8,000 Adjusted Capital Balance - Francis
2,800 Adjustments:
10,800 Francis, Capital 1,727,000
Increase in allowance for bad debts (2,800)
Francis, Capital Increase in landscaping supplies 10,000
2,800 1,727,000 Increase in accumulated depriciation (100,000) (92,800)
100,000 10,000 Francis, Capital 1,634,200
102,800 1,737,000
1,634,200 Francis and Pio Limited
Cash Investment - Pio
Landscaping Suppplies Cash 1,634,200
550,000 Pio, Capital 1,634,200
10,000
560,000

Accumulated Depreciation - Furniture & Equipment

100,000
100,000
200,000
 Cash
130,000
1,634,200
1,764,200
 Francis and Pio Limited
Statement of Financial Position
October 1, 2020
ASSETS
Current Assets
Cash P 1,764,200
Trade Receivables ( Note 1 ) 709,200
Landscaping Supplies 560,000 P 3,033,400

Non-Current Assets
Property, Plant and Equipment 800,000
Total Assets P 3,833,400

LIABILITIES AND PARTNERS' EQUITY

Current Liabilities
Accounts Payable P 565,000

Partners' Equity
Francis, Capital P 1,634,200
Pio, Capital 1,634,200 3,268,400
Total Liability and Partners' Equity P 3,833,400

Computational Notes to the Financial Statement

 Computational Notes to the Financial Statement
Note 1: Trade Receivables
Accounts Receivable 720000
Allowance for Doubtful Accounts 10800
P 709,200
 DATE PARTICULARS P/R DEBIT CREDIT
2020
Apr 1 Anne, Capital 2,500
Allowance for Bad Debts 2,500
Increased amount of possible uncollectible accounts

1 Catering Supplies Inventory 5,000

Anne, Capital 5,000
Revaluation of Catering Supplies Inventory

1 Anne, Capital 3,300

Accumulated Depreciation 3,300
Revalue of assets based on agreed valuation

CLOSING THE BOOKS OF SOLE PROPRIETORSHIP

1 Allowance for Doubtful Accounts 7,500
Accounts Payable 8,000
Anne, Capital 209,500
Cash 25,000
Accounts Receivable 75,000
Catering Supplies Inventory 15,000
Catering Utensils and Equipment 110,000
 To close the boooks of existing sole proprietorship business

PARTNERSHIP BOOKS
1 Cash 25,000
Accounts Receivable 75,000
Catering Supplies Inventory 15,000
Catering Utensils and Equipment 110,000
Allowance for Doubtful Accounts 7,500
Accounts Payable 8,000
Anne, Capital 209,500
Initial Investment of Anne

1 Cash 104,750
Mary, Capital 104,750
Initial Investment of Mary
 Allowance for Bad Debts
5,000 Adjusted Capital Balance -Anne
2,500 Adjustments:
7,500 Anne, Capital
Increase in allowance for bad debts (2,500)
Anne, Capital Increase in catering supplies inventory 5,000
2,500 210,300 Increase in accumulated depriciation (3,300)
3,300 5,000 Anne, Capital

209,500
Cash Investment - Mary
Catering Supplies Inventory Cash 104,750
10,000 Mary, Capital
5,000
15,000

Accumulated Depreciation Computing Capital of Anne and Mary

6,700 Anne's Adjusted Capital 209,500
3,300 Equivalent Capital Ownership 2/3
10,000
Mary's Equivalent Capital Ownership 1/3
104,750
 Total Partnership Capital 314,250

Cash
25,000
104,750
129,750
 Anne & Mary Catering Services
Statement of Financial Position
Anne April 1, 2020
ASSETS
210,300 Current Assets
Cash P 129,750
Trade Receivables ( Note 1 ) 67,500
(800) Catering Supplies Inventory 15,000 P 212,250
209,500
Non-Current Assets
Catering Utensils and Equipment 110,000
ry Total Assets P 322,250

104,750 LIABILITIES AND PARTNERS' EQUITY

Current Liabilities
Accounts Payable P 8,000

Partners' Equity
Anne, Capital P 209,500
Mary, Capital 104,750 314,250
Total Liabilities and Partners' Equity P 322,250
 Computational Notes to the Financial Statement
Note 1: Trade Receivables
Accounts Receivable P 75,000
Allowance for Doubtful Accounts 7,500
Total Trade Receivables P 67,500
 DATE PARTICULARS P/R DEBIT CREDIT
2020 MICHAEL
Jan. 1 Michael, Capital 2,000
Allowance for Bad Debts 2,000
Increased amount of possible uncollectible accounts

1 Michael, Capital 400

Office Supplies 400
Revaluation of Office Supplies

1 Michael, Capital 2,000

Accumulated Depreciation - Office Equipment 2,000
Revalue of assets

1 Accumulated Depriciation - Furniture & Fixture 1,000

Michael, Capital 1,000
Revalue of assets

CLOSING THE BOOKS OF SOLE PROPRIETORSHIP

1 Allowance for Bad Debts 2,000
Accumulated Depreciation - Office Equipment 9,500
Accumulated Depriciation - Furniture & Fixture 5,000
Accounts Payable 15,000
Michael, Capital 162,100
 Cash 50,000
Accounts Receivable 20,000
Office Supplies 3,600
Office Equipment 80,000
Furniture & Furniture 40,000
To close the boooks of existing sole proprietorship business

RAFAEL
1 Rafael, Capital 1,800
Allowance for Bad Debts 1,800
Increased amount of possible uncollectible accounts

1 Rafael, Capital 500

Office Supplies 500
Revaluation ofOffice Supplies

1 Accumulated Depriciation - Office Equipment 1,500

Rafael,Capital 1,500
Revalue of assets

CLOSING THE BOOKS OF SOLE PROPRIETORSHIP

1 Allowance for Bad Debts 1,800
Accumulated Depreciation - Office Equipment 7,500
Accumulated Depriciation - Furniture & Fixture 3,000
 Accounts Payable 10,000
Rafael, Capital 119,200
Cash 30,000
Accounts Receivable 18,000
Office Supplies 5,500
Office Equipment 60,000
Furniture & Furniture 28,000
To close the boooks of existing sole proprietorship business

PARTNERSHIP BOOKS
1 Cash 50,000
Accounts Receivable 20,000
Office Supplies 3,600
Office Equipment 70,500
Furnitures & Fixtures 35,000
Allowance for Bad Debts 2,000
Accounts Payable 15,000
Michael, Capital 162,100
Initial Investment of Michael

1 Cash 30,000
Accounts Receivable 18,000
Office Supplies 4,500
Office Equipment 52,500
Furnitures & Fixtures 25,000
Allowance for Bad Debts 1,800
Accounts Payable 10,000
Rafael, Capital 118,200
Initial Investment of Rafael
MICHAEL
Michael, Capital Accumulated Depreciation - Office Equipment
2,000 165,500 7,500
400 1,000 2,000
2,000 9,500

162,100 Accumulated Depreciation - Furniture & Fixtures

1,000 6,000
Office Suppplies
4,000 400 5,000

3,600

RAFAEL
Rafael, Capital Accumulated Depreciation - Office Equipment
1,800 119,000 9,000
500 1,500 1,500
10,500
118,200

Office Suppplies
5,000 500
4,500
 Ledger Accounts - Micahel & Rafael
Michael Rafael
Cash 50,000 30,000
Accounts Receivable 20,000 18,000
Office Supplies 4,000 5,000
Office Equipment 80,000 60,000
Accumulated Depreciation-Office Equipment 7,500 9,000
Furniture and Fixture 40,000 28,000
Accumulated Depreciation-Furniture & Fixture 6,000 3,000
Accounts Payable 15,000 10,000
165,500 119,000

Adjusted Capital Balance - Micahel & Rafael

Michael Rafael
Cash 50,000 30,000
Accounts Receivable 20,000 18,000
Allowance for Bad Debts (2,000) (1,800)
Office Supplies 3,600 4,500
Office Equipment 70,500 52,500
Furniture and Fixture 35,000 25,000
Accounts Payable (15,000) (10,000)
Capital Balance 162,100 118,200
 DATE PARTICULARS P/R DEBIT CREDIT ROMY ENGINEERING
2020 ROMY ENGINEERING SERVICES
Jan. 1 Argem, Capital 1,500
Allowance for Bad Debts 1,500
Increased amount of possible uncollectible accounts

1 Accumulated Depreciation - Office Equipment 2,400

Argem, Capital 2,400
Revaluation of Office Equipment

1 Argem, Capital 400

Accumulated Depreciation -Furniture & Fixtures 400
Revalue of assets

1 Argem, Capital 1,000

Interest Payable 1,000

1 Argem, Capital 1,400

Office Supplies 1,400
Revalue of assets

CLOSING THE BOOKS OF SOLE PROPRIETORSHIP

ROMY ENGINEERING SERVICES
1 Allowance for Bad Debts 4,500
Accumulated Depreciation - Office Equipment 19,600
Accumulated Depreciation - Furniture & Fixtures 6,400 ARGEM PROPERTY M
Accounts Payable 8,000
Interest Payable 1,000
Notes Payable 10,000
Argem, Capital 176,100
Cash 38,000
Accounts Receivable 45,000
Office Supplies 12,600
Office Equipment 98,000
Furniture and Fixture 32,000
To close the books of existing sole proprietorship business

ARGEM PROPERTY MANAGEMENT SERVICES

1 Romy, Capital 1,500
Allowance for Bad Debts 1,500
Increased amount of possible uncollectible accounts

1 Romy, Capital 400

Accumulated Depreciation - Furniture & Fixture 400
Revaluation of Furniture and Fixtures

1 Accumulated Depreciation - Furniture & Fixture 3,000

Romeo, Capital 3,000
 Revaluation of Furniture and Fixtures

1 Romy, Capital 700

Office Supplies 700
Revaluation of Office Supplies

CLOSING THE BOOKS OF SOLE PROPRIETORSHIP

1 Allowance for Bad Debts 6,500
Accumulated Depreciation - Office Equipment 24,000
Accumulated Depreciation - Furniture & Fixtures 224,000
Accounts Payable 22,000
Romy, Capital 12,400
Cash 46,000
Accounts Receivable 65,000
Office Supplies 6,300
Office Equipment 110,000
Furniture and Fixture 62,000
To close the books of existing sole proprietorship business

PARTNERSHIP BOOKS
1 Cash 46,000
Accounts Receivables 65,000
 Office Supplies 6,300
Office Equipment 88,000
Furniture and Fixtures 49,600
Allowance for Bad Debts 6,500
Accounts Payable 24,000
Romy, Capital -
Initial investment of Romy

1 Cash 358,600
Accounts Receivable 45,000
Office Supplies -
Office Equipment 98,000
Furniture and Fixture 32,000
Allowance for Bad Debts 178,000
Accounts Payable 8,000
Notes Payable 10,000
Interest Payable 1,000
Argem, Capital 336,600
Initial investment of Argem
ROMY ENGINEERING SERVICES
Allowance for Bad Debts Accumulated Depreciation - Office Equipment
5,000 3,000 25,000
1,500
6,500 22,000

Romy, Capital Accumulated Depreciation - Furniture & Fixtures

1,500 224,000 12,000
700 3,000 400
400
224,400 12,400 1

Office Suppplies
7,000 700

6,300

2
ARGEM PROPERTY MANAGEMENT SERVICES
Allowance for Bad Debts Accumulated Depreciation - Office Equipment
3,000 2,400 22,000
1,500
4,500 19,600

Argem, Capital Accumulated Depreciation - Furniture & Fixtures

1,500 178,000 6,000
1,400 2,000 400
1,000 6,400
400
175,700

Office Suppplies
14,000 1,400

12,600
 Romy Argem
Unadjusted Capital 224,000 178,000
Revaluations: ADD/(DEDUCT)

Allowance for Bad Debts (1,500) (1,500)

Office Supplies (700) (1,400)
Interest Payable (1,000)
Effect in value of Office Equipment 3,000 2,400
Effect in value of Furniture and Fixtures (400) (400)
Adjusted Capital Balance 224,400 176,100

Equivalent Capital Credit of Romy 40%

Total Partnership Capitalization 561,000
Argem Capital Ownership 60%
Argem, Capital 336,600
Asset (161,600)
Contra Asset + Liabilities 23,500
Cash (38,000) 160,500
Additional Cash Investment 198,500
 DATE PARTICULARS P/R DEBIT CREDIT
2020
Jan. 1 Martin, Capital 8,000
Allowance for Bad Debts 8,000
Increased amount of possible uncollectible accounts

1 Martin, Capital 142,000

Accumulated Depreciation - Delivery Equipment 90,000
Accumulated Depreciation - Office Equipment 36,000
Accumulated Depreciation - Furniture and Fixtures 16,000
Revalue of assets

CLOSING THE BOOKS OF SOLE PROPRIETORSHIP

1 Allowance for Bad Debts 8,000
Accumulated Depreciation - Delivery Equipment 90,000
Accumulated Depreciation - Office Equipment 36,000
Accumulated Depreciation - Furniture and Fixtures 16,000
Accounts Payable 30,000
Martin, Capital 870,000
Cash 400,000
Accounts Receivable 80,000
Delivery Equipment 350,000
Office Equipment 140,000
Furnitures and Fixtures 80,000
 To close the books of the existing sole proprietorship business

PARTNERSHIP BOOKS
1 Cash 400,000
Accounts Receivable 80,000
Delivery Equipment 260,000
Office Equipment 104,000
Furniture & Fixtures 64,000
Allowance for Bad Debts 8,000
Accounts Payable 30,000
Martin, Capital 870,000
Initial investment of Martin

1 Cash 530,000
Computer 50,000
Jude, Capital 580,000
Initial investment of Jude
 Martin's Unadjusted Capital 1,020,000

Adjustments:
Increase in allowance for doubtful
accounts 8,000
Depreciation of delivery equipment 90,000
Depreciation of office equipment 36,000
Depreciation of furniture 16,000 150,000

1 Martin's Adjusted Capital 1,170,000

Total Partners' Equity 1,450,000

Multiply by Jude's Capital Interest 40%

2 Jude's Capital 580,000

Computer Investment (50,000)
3 Cash to be invested by Jude 530,000