Problem #8

Two Sole Proprietors Form a Partnership

The business assets of Geron and Yumol appear below:

Geron Yumol
Cash P11000 P22354
Accounts Receivable 234536 567890
Inventories 120035 260102
Land 603000 -
Building - 428267
Furniture and Fixtures 50345 34789
Other Assets 2000 3600
Total
Accounts Payable P178940 P243650
Notes Payable 200000 345000
Geron, Capital 641976 -
Yumol, Capital - 728352
Total P1020916 P1317002
Geron and Yumol agreed to form a partnership contributing their assets and equities subject to the following
adjustment:
a. Accounts receivable of P20000 in Geron’s books and P35000 in Yumol’s are uncollectible.
b. Inventories of P5500 and P6700 are worthless in Geron’s and Yumol’s respective books.
c. Other assets of P2000 for Geron and P3000 for Yumol are to be written off.
Required:
Prepare the journal entries for the formation of the partnership as at July 1.
*Geron
Cash 11000
Accounts Receivable 234536
Inventories 114535
Land 603000
Furniture and Fixtures 50345
Allowance for Uncollectible Accounts 20000
Accounts Payable 178940
Notes Payable 200000
Geron, Capital 614476
*Yumol
Cash 22354
Accounts Receivable 567890
Inventories 253402
Building 428267
Furniture and Fixtures 34789
Allowance for Uncollectible Accounts 35000
Accounts Payable 243650
Notes Payable 345000
Yumol, Capital 683052