Scribd
Upload
2K views

PROBLEM 2 - Two Sole Proprietors Form A Partnership PROBLEM 2 - Two Sole Proprietors Form A Partnership

Geron and Yumol agreed to form a partnership and combine their assets and liabilities. Some of their accounts receivable, inventories, and other assets were found to be worthless. Journal entries were made in the individual books of Geron and Yumol to write off these amounts from their capital accounts. A statement of financial position was prepared for the new Geron and Yumol Partnership that combined the assets and liabilities of both previous sole proprietorships.

Uploaded by

Rudy Lugas
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
2K views

PROBLEM 2 - Two Sole Proprietors Form A Partnership PROBLEM 2 - Two Sole Proprietors Form A Partnership

Geron and Yumol agreed to form a partnership and combine their assets and liabilities. Some of their accounts receivable, inventories, and other assets were found to be worthless. Journal entries were made in the individual books of Geron and Yumol to write off these amounts from their capital accounts. A statement of financial position was prepared for the new Geron and Yumol Partnership that combined the assets and liabilities of both previous sole proprietorships.

Uploaded by

Rudy Lugas
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 7

PROBLEM 2 – Two Sole Proprietors form a Partnership

The business
The business assets
assets of
of Geron
Geron and
and Yumol
Yumol appear
appear below:
below:
  

Geron
Geron Yumol
Yumol

Cash
Cash ₱₱ 11,000
11,000 ₱
₱ 22,354
22,354
Accounts Receivable
Accounts Receivable 234,536
234,536 567,890
567,890
Inventories
Inventories 120,035
120,035 260,102
260,102
Land
Land 603,000
603,000 --
Building
Building -- 428,267
428,267
Furniture and
Furniture and Fixtures
Fixtures 50,345
50,345 34,789
34,789
Other Assets
Other Assets 2,000
2,000 3,600
3,600
Total
Total 1,020,916
1,020,916 1,317,002
1,317,002
  
Accounts Payable
Accounts Payable ₱
₱ 178,940
178,940 ₱
₱ 243,650
243,650
Notes Payable
Notes Payable 200,000
200,000 345,000
345,000
Geron, Capital
Geron, Capital 641,976
641,976 --
Yumol, Capital
Yumol, Capital -- 728,352
728,352
Total
Total 1,020,916
1,020,916 1,317,002
1,317,002
Geron and Yumol agreed to form a partnership contributing their assets and
equities subject to the following adjustments:

a.
a. Accounts
Accounts receivable
receivable of
of ₱20,000
₱20,000 in
in Geron’s
Geron’s books
books and
and ₱35,000
₱35,000 in
in Yumol’s
Yumol’s are
are uncollectible.
uncollectible.
  
Geron,
Geron, Capital
Capital 20,000
20,000
Allowance
Allowance for
for uncollectible
uncollectible accounts
accounts 20,000
20,000
  
Yumol,
Yumol, Capital
Capital 35,000
35,000
Allowance
Allowance for
for uncollectible
uncollectible accounts
accounts 35,000
35,000
b. Inventories of ₱5,500 and ₱6,700 are worthless in Geron’s and Yumol’s respective books.
 
Geron, Capital 5,500
Inventories 5,500
Yumol, Capital 6,700
Inventories 6,700

c. other assets of ₱2,000 for Geron and ₱3,600 for Yumol are to be written off.

Geron, Capital 2,000


Other Assets 2,000

Yumol, Capital 3,600


Other Assets 3,600
Required:
Prepare the journal entries for the formation of the partnership as at July 1.

Books of Geron
July 1 Geron, Capital 27,500
Allowance for Uncollectible Accounts 20,000
Inventories 5,500
Other Assets 2,000

Books of Yumol
July 1 Yumol, Capital 45,500
Allowance for Uncollectible Accounts 35,000
Inventories 6,700
Other Assets 3,600
Books of Geron

July 1 Cash 11,000


Accounts Receivable 234,536
Inventory (120,035 – 5,500) 114,535
Land 603,000
Furnitures & Fixtures 50,345
Allowance for uncollectible accounts 20,000 Accounts Payable
178,940
Notes Payable 200,000
Geron, Capital 614,476
Books of Yumol

July 1 Cash 22,354


Accounts Receivable 567,890
Inventory (260,102 – 5,500) 253,402
Building 428,267
Furnitures & Fixtures 34,789
Allowance for uncollectible accounts 35,000 Accounts Payable
243,650
Notes Payable 345,000
Yumol, Capital 683,052
GERON and YUMOL Partnership
Statement of Financial Position
July 1, 2021
 
Assets
Cash ₱ 33,354
Accounts Receivable 802,426
Less: Allowance for Uncollectible Accounts 55,000 747,426
Inventories (380,137 – 12,200) 367,937
Land 603,000
Building 428,267
Furniture and Fixtures 85,134
Other Assets (5,500 – 5,500) -
Total ₱ 2,265,118
 
Liabilities and Owners’ Equity
Accounts Payable ₱ 422,590
Notes Payable 545,000
Geron, Capital (641,976 – 27,500) 614,476
Yumol, Capital (728,352 – 45,500) 683,052
Total ₱ 2,265,118

You might also like