ROCK AUTO HORN AUTO

DEBIT CREDIT DEBIT CREDIT

CASH P 20,000 P 40,000
ACCOUNTS RECEIVABLE 80,000 160,000
ALLOWANCE FOR DOUBTFUL ACCOUNTS 8,000 16,000
NOTES RECEIVABLE 10,000 20,000
MERCHANDISE INVENTORY 60,000 120,000
STORE EQUIPMENT 40,000 80,000
ACCUM. DEPN 10,000 20,000
ACCOUNTS PAYABLE 25,000 50,000
LOANS PAYABLE 100,000
ROCK, CAPITAL 167,000
HORN, CAPITAL 234,000
TOTAL 210,000 210,000 420,000 420,000
ACCOUNTING 13 – ACCOUNTING FOR PARTNERHSIP AND CORPORATION
PRELIM QUIZ

Before they transfer their businesses to the partnership, they agreed on the following capital adjustments:
a. The allowance for doubtful accounts of Rock should be increased to 8% of Accounts receivable while Horn’s
allowance for doubtful accounts should be decreased by 2% of accounts receivable.
b. The merchandise inventory of Rock is undervalued by 20% while the merchandise inventory of Horn should be
decreased by 5%.
c. According to a professional appraiser, the store equipment of Rock is over-depreciated by P 8,000 while that of
Horn, the store equipment should be revalued to P 76,000.
d. Rock has not recorded the interest on a 30 day 16% promissory note with a face value of P 10,000 from Mr.
Dokling, a trade customer dated April 1, 2021. Also, unrecorded, is the unpaid salaries of some employees as of
November 30, 2021 amounting to P 1.200.
e. Horn on the other hand, has an unrecorded interest on Loans payable to PNB, amounting to P 100,000 dated
March 1, 2021 at 24% interest per annum. Also, an unpaid Meralco bill amounting to P 1,900.
1. Compute the net (debit) credit adjustment for Rocky and Hiro.
2. The adjusted capital of Rocky and Hiro would be:
3. How much total liabilities does the partnership have after formation?
4. How much total assets does the partnership have after formation?

For item nos. 5 to 10. Using information presented above, prepare the opening entries in the book of the new
partnership on November 30,2021 ( 2 pts)