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    MEDINA - Homework 1 No. 14

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    Von Andrei Medina
    This document summarizes the financial statements and adjustments for two business partners, Steve who owns a health store and Guy who owns a beauty salon. It shows their initial individual statements of financial position and then adjustments made to account for bad debts, depreciation of equipment, and inventory adjustments. The partners then form a partnership and additional entries are made to bring each partner's equity contribution up to the agreed upon $100,000 level using either additional cash investments or a bonus method.

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    MEDINA - Homework 1 No. 14

    Uploaded by

    Von Andrei Medina
    268 views7 pages
    This document summarizes the financial statements and adjustments for two business partners, Steve who owns a health store and Guy who owns a beauty salon. It shows their initial individual statements of financial position and then adjustments made to account for bad debts, depreciation of equipment, and inventory adjustments. The partners then form a partnership and additional entries are made to bring each partner's equity contribution up to the agreed upon $100,000 level using either additional cash investments or a bonus method.

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    MEDINA - Homework 1 no. 14

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    This document summarizes the financial statements and adjustments for two business partners, Steve who owns a health store and Guy who owns a beauty salon. It shows their initial individual statements of financial position and then adjustments made to account for bad debts, depreciation of equipment, and inventory adjustments. The partners then form a partnership and additional entries are made to bring each partner's equity contribution up to the agreed upon $100,000 level using either additional cash investments or a bonus method.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    268 views7 pages

    MEDINA - Homework 1 No. 14

    Uploaded by

    Von Andrei Medina
    This document summarizes the financial statements and adjustments for two business partners, Steve who owns a health store and Guy who owns a beauty salon. It shows their initial individual statements of financial position and then adjustments made to account for bad debts, depreciation of equipment, and inventory adjustments. The partners then form a partnership and additional entries are made to bring each partner's equity contribution up to the agreed upon $100,000 level using either additional cash investments or a bonus method.

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    Statement of Financial Position

    Steve Guy
    Health Store Beauty Salon
    Cash 25,000 11,000
    Accounts Receivable 25,000
    Merchandise Inventory 80,000
    Supplies Inventory 15,000 25,000
    Furniture and Equipment 50,000 85,000
    Total Assets 195,000 121,000

    Accounts Payable 20,000 5,000


    Notes Payable 30,000
    Capital 145,000 116,000
    Total Liabilities and Equity 195,000 121,000

    ADJUSTMENTS:
    A. Books of Steve Health Store
    a. Steve, Capital 5,000
    Allowance for Bad Debts 5,000

    b. Steve, Capital 15,000


    Furniture and Equipment 15,000

    c. Steve, Capital 10,000


    Merchandise Inventory 10,000

    d. No Entry

    e. Steve, Capital 2,500


    Interest Payable 2,500

    B. Books of Guy Beauty Salon


    a. No Entry

    b. Guy, Capital 15,000


    Furniture and Equipment 15,000

    c. No Entry

    d. Guy, Capital 10,000


    Supplies Inventory 10,000

    e. No Entry
    ANSWERS

    a) List down the adjusted assets and liabilities of each partner to determine
    partner's capital.
    CLOSING:
    A. Adjustments of Steve Health Store
    Allowance for Bad Debts 5,000
    Accounts Payable 20,000
    Notes Payable 30,000
    Interest Payable 2,500
    Steve, Capital 112,500
    Cash 25,000
    Accounts Receivable 25,000
    Merchandise Inventory 70,000
    Supplies Inventory 15,000
    Furniture and Equipment 35,000

    B. Adjustments of Guy Beauty Salon


    Accounts Payable 5,000
    Guy, Capital 91,000
    Cash 11,000
    Supplies 15,000
    Furniture and Equipment 70,000

    STEVE GUY
    Steve, Capital Guy, Capital
    5000 145000 15000 116,000
    15000 10000
    10000 25000 116,000
    2500 91,000
    32500 145000
    112500

    Steve Guy
    Health Store Beauty Salon
    Cash 25,000 11,000
    Accounts Receivable 25,000
    Allowance for Bad Debts (5,000)
    Merchandise Inventory 70,000
    Supplies Inventory 15,000 15,000
    Furniture and Equipment 35,000 70,000
    Total Assets 165,000 96,000
    Accounts Payable 20,000 5,000
    Notes Payable 30,000
    Interest Payable 2,500
    Capital 112,500 91,000
    Total Liabilities and Equity 165,000 96,000

    b) To comply with an agreed equity of P100,000 for each partner, show the
    additional cash to be invested or cash to be withheld by a partner.

    Cash 9,000
    Guy, Capital 9,000

    Agreed Capital 100,000


    Capital to be Contributed 91,000
    Required Additional Cash Capital 9,000

    Steve, Capital 12,500


    Cash 12,500

    Agreed Capital 100,000


    Capital to be Contributed 112,500
    Required Additional Cash Capital (12,500) To be withdrawn

    c) Prepare two entries to record the investments of the partners in the partnership
    books.

    Cash 12,500
    Accounts Receivable 25,000
    Merchandise Inventory 70,000
    Supplies Inventory 15,000
    Furniture and Equipment 35,000
    Allowance for Bad Debts 5,000
    Accounts Payable 20,000
    Notes Payable 30,000
    Interest Payable 2,500
    Steve, Capital 100,000

    Cash 20,000
    Supplies Inventory 15,000
    Furniture and Equipment 70,000
    Accounts Payable 5,000
    Guy, Capital 100,000
    d) Prepare a statement of financial position just after formation.
    Health and Beauty Shop
    Statement of Financial Position
    As of December 31, 201X
    Amounts in Philippine Peso

    ASSETS
    Current Assets
    Cash 32,500
    Accounts Receivable 25,000
    Allowance for Bad Debts (5,000)
    Merchandise Inventory 70,000
    Supplies Inventory 30,000 152,500
    Non-current Assets
    Furniture and Equipment 105,000
    Total Assets 257,500

    LIABILITIES AND EQUITY


    Current Liabilities
    Accounts Payable 25,000
    Notes Payable 30,000
    Interest Payable 2,500
    Total Liabilities 57,500
    Equity
    Steve, Capital 100,000
    Guy, Capital 100,000
    Total Liabilities and Equity 257,500

    e) Change the agreement listed in b) if instead of cash method, they agreed to use
    the bonus method to comply with the required P100,000 equity for each partner.
    Prepare the third entry to record the bonus capital.

    Steve, Capital 12,500


    Guy, Capital 9,000
    Cash 3,500

    Steve Guy Total


    AC 100,000 100,000 200,000
    CC 112,500 91,000
    Bonus to Guy (12,500) 9,000 (3,500)
    uty Salon
    be withdrawn
    To be withdrawn

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