John admits Lexter to partnership interest in his

business. Accounts in the ledger of John on

December 31,2019, just prior to the admission of
Lexter, show the following balances:

Cash ₱ 13,000.00
Accounts Receivable 60,000.00
Merchandise Inventory 90,000.00
Accounts Payable 31,000.00
John, Capital 132,000.00

It is agreed that for purposes of establishing John's

interest, the following adjustments shall be made:
1. An allowance for doubtful accounts of 2%of accounts
receivable is to be established
2.The merchandise inventory is to be valued at P101, 000
3. Prepaid expense of P3,250 and accrued expense of P2,000are
to be recognized.
4. Lexter is to invest sufficient cash to give him a 3/4 interest in
the partnership
Adjusting Entries
Particulars Debit Credit
John, Capital 1,200.00
Allowance for Doubtful Accounts 1,200.00

Merchandise Inventory 11,000.00

John, Capital 11,000.00

Prepaid Expense 3,250.00

John, Capital 3,250.00

John, Capital 2,000.00

Accrued Expense 2,000.00

Cash 429,150.00
Lexter, Capital 42,950.00
 John Lexter
Balance Sheet
December 1,2020

Asset:
Cash ₱ 442,150.00
Accounts Receivable 60000
ADA -1200 58800
Merchandise Inventory 110000
Prepaid Expense -3250
₱ 607,700.00

Liabilities & Capital

Accounts Payable
Accrued Expense
John, Capital
Lexter, Capital
₱ 33,000.00
572200
₱ 605,200.00