NON-CASH INVESTMENTS

Pedro and Jose form a partnership for the first time. Books of the Partnership:
Pedro Jose Cash 70,000.00
(Fair Value) (Fair Value) Pedro, Capital
Cash 70,000.00
Merchandise Inventory (cost P10,000) 20,000.00 Merchandise Inventory 20,000.00
Computer Equipment (cost 50,000) 30,000.00 Computer Equipment 30,000.00
Total 70,000.00 50,000.00 Jose, Capital

They both agreed to have equal capital accounts. Bonus Method

Pedro, Capital 10,000.00
Jose, Capital

Goodwill Method
Goodwill 20,000.00
Jose, Capital
70,000.00

50,000.00

10,000.00

20,000.00
SOLE PROPRIETOR AND ANOTHER INDIVIDUAL FORM A PARTNERSHIP

Jose Company Sole Proprietor's books are retained

Statement of Financial Position
July 1, 2016 Inventory
Accumulated depreciation
Assets
Cash 60,000.00
Accounts Receivable 50,000.00
Inventory 70,000.00
Equipment 40,000.00
Less: accumulated depreciation 4,000.00 36,000.00 Cash
Total Assets 216,000.00

Liabilities and Equity

Accounts Payable 86,000.00
Jose, Capital 130,000.00
Total Liabilities and Equity 216,000.00

Jose and Pedro agree to form a partnership to be known as JP Partnership.

1. Allowance for bad debts of 5,000 is to be provided.
2. Inventory is to be recorded at market value of 80,000.
3. The equipment has a fair value of 35,000.
4. 2,000 of accounts payable has not been recorded.

Pedro is to contribute 100,000 cash for a one-third capital interest.

Sole Proprietor's books are retained for the partnership.

Inventory 10,000.00
Accumulated depreciation 4,000.00
Allowance for bad debts 5,000.00
Equipment 5,000.00
Accounts payable 2,000.00
Jose, Capital 2,000.00

Cash 100,000.00
Pedro, Capital 100,000.00
 JP Partnership
Statement of Financial Position
July 1, 2016

Assets
Cash 160,000.00
Accounts Receivable 50,000.00
Allowance for Bad Debts 5,000.00 45,000.00
Inventory 80,000.00
Equipment 35,000.00
Total Assets 320,000.00

Liabilities and Equity

Accounts Payable 88,000.00
Jose, Capital 132,000.00
Pedro, Capital 100,000.00
Total Liabilities and Equity 320,000.00
SOLE PROPRIETOR AND ANOTHER INDIVIDUAL FORM A PARTNERSHIP
New books are opened for the partnership.
Jose Company BOOKS OF JOSE COMPANY
Statement of Financial Position 1. Adjust the accounts to their fair values.
July 1, 2016 Inventory 10,000.00
Accumulated depreciation 4,000.00
Assets Allowance for bad debts
Cash 60,000.00 Equipment
Accounts Receivable 50,000.00 Accounts payable
Inventory 70,000.00 Jose, Capital
Equipment 40,000.00 2. Close the accounts.
Less: accumulated depreciation 4,000.00 36,000.00 Accounts Payable 88,000.00
Total Assets 216,000.00 Allowance for Bad Debts 5,000.00
Jose, Capital 132,000.00
Cash
Liabilities and Equity Accounts Receivable
Accounts Payable 86,000.00 Inventory
Jose, Capital 130,000.00 Equipment
Total Liabilities and Equity 216,000.00
PARTNERSHIP BOOKS
Jose and Pedro agree to form a partnership to be known as JP Partnership. Cash 60,000.00
1. Allowance for bad debts of 5,000 is to be provided. Accounts Receivable 50,000.00
2. Inventory is to be recorded at market value of 80,000. Inventory 80,000.00
3. The equipment has a fair value of 35,000. Equipment 35,000.00
4. 2,000 of accounts payable has not been recorded. Accounts Payable
Allowance for Bad Debts
Pedro is to contribute 100,000 cash for a one-third capital interest. Jose, Capital

Cash 100,000.00
Pedro, Capital
 5,000.00
5,000.00
2,000.00
2,000.00

60,000.00
50,000.00
80,000.00
35,000.00

88,000.00
5,000.00
132,000.00

100,000.00
 TWO PROPRIETORS FORM A PARTNERSHIP
Gerry and Henry decided to consolidate their business to form a BOOKS OF HENRY ARE TO BE U
partnership to be called GH Partnership.
Gerry Company CONDITIONS: BOOKS OF GERRY
Statement of Financial Position a. 10% of accounts receivable is to be set up as
June 30, 2016 uncollectible in each book. Gerry, Capital
b. Merchandise inventory of Henry is to be
Assets increased by 1,000.
Cash 5,000.00 c. The furniture and fixtures of Gerry and Henry are
Accounts Receivable 10,000.00 to be depreciated by 600 and 900 respectively. Allowance for Bad Debts
Merchandise Inventory 8,000.00 Accumulated Depreciation
Furniture and fixtures 6,000.00 Accounts Payable
Total Assets 29,000.00 Gerry, Capital

Liabilities and Equity

Accounts Payable 3,000.00
Gerry, Capital 26,000.00
Total Liabilities and Equity 29,000.00 BOOKS OF HENRY
Merchandise Inventory
Henry, Capital
Henry Company
Statement of Financial Position CONDITIONS:
June 30, 2016 a. 10% of accounts receivable is to be set up as
uncollectible in each book. Cash
Assets b. Merchandise inventory of Henry is to be Accounts Receivable
Cash 4,000.00 increased by 1,000. Merchandise Inventory
Accounts Receivable 8,000.00 c. The furniture and fixtures of Gerry and Henry are Furniture and fixtures
Merchandise Inventory 10,000.00 to be depreciated by 600 and 900 respectively.
Furniture and fixtures 9,000.00
Total Assets 31,000.00

Accumulated depreciation
 Liabilities and Equity
Accounts Payable 6,000.00
Henry, Capital 25,000.00
Total Liabilities and Equity 31,000.00

GH Partnership
Statement of Financial Position
June 30, 2016

Assets
Cash 9,000.00
Accounts Receivable 18,000.00
Allowance for Bad Debts 1,800.00 16,200.00
Merchandise Inventory 19,000.00
Furniture and fixtures 13,500.00
Total Assets 57,700.00

Liabilities and Equity

Accounts Payable 9,000.00
Henry, Capital 24,300.00
Gerry, Capital 24,400.00
Total Liabilities and Equity 57,700.00
 BOOKS OF HENRY ARE TO BE USED AS THE PARTNERSHIP BOOKS.

BOOKS OF GERRY

Gerry, Capital 1,600.00

Allowance for Bad Debts 1,000.00
Accumulated Depreciation 600.00

Allowance for Bad Debts 1,000.00

Accumulated Depreciation 600.00
Accounts Payable 3,000.00
Gerry, Capital 24,400.00
Cash 5,000.00
Accounts Receivable 10,000.00
Merchandise Inventory 8,000.00
Furniture and fixtures 6,000.00

BOOKS OF HENRY
Merchandise Inventory 1,000.00
Henry, Capital 700.00
Allowance for Bad Debts 800.00
Accumulated Depreciation 900.00

Cash 5,000.00
Accounts Receivable 10,000.00
Merchandise Inventory 8,000.00
Furniture and fixtures 5,400.00
Allowance for Bad Debts 1,000.00
Accounts Payable 3,000.00
Gerry, Capital 24,400.00

Accumulated depreciation 900.00

Furniture and fixtures 900.00
TWO PROPRIETORS FORM A PARTNERSHIP
Gerry and Henry decided to consolidate their business to form a partnership to BOOKS OF GERRY ARE TO BE US
be called GH Partnership.
Gerry Company CONDITIONS:
Statement of Financial Position a. 10% of accounts receivable is to be
June 30, 2016 set up as uncollectible in each book.
b. Merchandise inventory of Henry is to
Assets be increased by 1,000.
c. The furniture and fixtures of Gerry
Cash 5,000.00 and Henry are to be depreciated by 600
Accounts Receivable 10,000.00 and 900 respectively.
Merchandise Inventory 8,000.00
Furniture and fixtures 6,000.00
Total Assets 29,000.00

Liabilities and Equity

Accounts Payable 3,000.00
Gerry, Capital 26,000.00
Total Liabilities and Equity 29,000.00

Henry Company
Statement of Financial Position
June 30, 2016

Assets
Cash 4,000.00
Accounts Receivable 8,000.00
Merchandise Inventory 10,000.00
Furniture and fixtures 9,000.00
Total Assets 31,000.00

Liabilities and Equity

Accounts Payable 6,000.00
Henry, Capital 25,000.00
Total Liabilities and Equity 31,000.00
GERRY ARE TO BE USED AS THE PARTNERSHIP BOOKS.
TWO PROPRIETORS FORM A PARTNERSHIP
Gerry and Henry decided to consolidate their business to form a partnership to
be called GH Partnership.
Gerry Company
Statement of Financial Position
June 30, 2016

Assets
Cash 5,000.00
Accounts Receivable 10,000.00
Merchandise Inventory 8,000.00
Furniture and fixtures 6,000.00
Total Assets 29,000.00

Liabilities and Equity

Accounts Payable 3,000.00
Gerry, Capital 26,000.00
Total Liabilities and Equity 29,000.00

Henry Company
Statement of Financial Position
June 30, 2016

Assets
Cash 4,000.00
Accounts Receivable 8,000.00
Merchandise Inventory 10,000.00
Furniture and fixtures 9,000.00
Total Assets 31,000.00

Liabilities and Equity

Accounts Payable 6,000.00
Henry, Capital 25,000.00
Total Liabilities and Equity 31,000.00
 NEW PARTNERSHIP BOOKS WILL BE USED

CONDITIONS:
a. 10% of accounts receivable is to be
set up as uncollectible in each book.
b. Merchandise inventory of Henry is
to be increased by 1,000.
c. The furniture and fixtures of Gerry
and Henry are to be depreciated by
600 and 900 respectively.