FISH R US

Steps in Partnership Formation

Two individuals with no existing business:

1. Open the books of the partnership by recording the
investments of each partner.

Asset xx
Capital xx
Steps in Partnership Formation

Sole Proprietors forming a business:

1. Revalue/adjust assets and liabilities in each separate
books according to agreement.
2. Close the books of each sole proprietor.
3. Open the books of the partnership by recording the
investments of the partners.
Steps in Partnership Formation

Sole Proprietor and Another Individual with no existing

business:
1. Revalue/adjust assets and liabilities according to
agreement.
2. Close the books of the sole proprietor.
3. Open the books of the partnership by recording the
investments of the partners.
 Fish R Us
Post-Closing Trial Balance
Dec. 31, 2007

Debit Credit

Cash ₱ 36,000.00
Accounts Receivable 150,000.00
Allowance for Uncollectible Accounts ₱ 16,000.00
Inventory 440,000.00
Equipment 135,000.00
Accumulated Depreciation 75,000.00
Accounts Payable 30,000.00
Espanol, Capital 640,000.00
Total ₱ 761,000.00 ₱ 761,000.00
Adjustments: Agreed Per books Inc.(Dec.)
Accounts Receivable,net ₱ 140,000.00 ₱ 134,000.00 ₱ 6,000.00
Inventory 460,000.00 440,000.00 20,000.00
Equipment, net 124,000.00 60,000.00 64,000.00

Allowance for Uncollectible Accounts ₱ 6,000.00

Espanol, Capital ₱ 6,000.00

Allowance for Uncollecti ble Accounts 6,000.00

Espanol, C apital 6,000.00

Inventory 20,000.00
Espanol, C apital 20,000.00

Accumulated Depreci ation 64,000.00

Espanol, C apital 64,000.00

Allowance for Uncollectible Accounts 6,000.00

Espanol, Capital 6,000.00

Inventory 20,000.00
Espanol, Capital 20,000.00

Accumulated Depreciation 64,000.00

Espanol, Capital 64,000.00
 Books of Espanol

Allowance for Uncollectible Accounts 6,000.00

Inventory 20,000.00
Accumulated Depreciation 64,000.00
Espanol, Capital 90,000.00
To record adjustments in assets.
Adjusted Trial Balance
Debit Credit

Cash ₱ 36,000.00
Accounts Receivable 150,000.00
Allowance for Uncollectible Accounts ₱ 10,000.00
Inventory 460,000.00
Equipment 135,000.00
Accumulated Depreciation 11,000.00
Accounts Payable 30,000.00
Espanol, Capital 730,000.00
Total ₱ 781,000.00 ₱ 781,000.00
 Books of Espanol

Allowance for Uncollectible Accounts 10,000.00

Accumulated Depreciation 11,000.00
Accounts Payable 30,000.00
Espanol, Capital 730,000.00
Cash 36,000.00
Accounts Receivable 150,000.00
Inventory 460,000.00
Equipment 135,000.00
To close the books of Espanol.
 Books of the Partnership
Cash ₱ 36,000.00
Accounts Receivable 150,000.00
Inventory 460,000.00
Equipment 124,000.00
Allowance for Uncollectible Accounts ₱ 10,000.00
Accounts Payable 30,000.00
Espanol, Capital 730,000.00
To record investment of Espanol.

Cash 730,000.00
Quino, Capital 730,000.00
To record investment of Quino.
 Fish R Us
Statement of Financial Position
Jan. 1, 2008

Assets
Cash ₱ 766,000.00
Accounts Receivable ₱ 150,000.00
Allowance for Uncollectible Accounts (10,000.00) 140,000.00
Inventory 460,000.00
Equipment 124,000.00
Total Assets ₱ 1,490,000.00

Liabilities and Owners' Equity

Accounts Payable ₱ 30,000.00
Espanol, Capital 730,000.00
Quino, Capital 730,000.00
Total Liabilities and Owners' Equity ₱ 1,490,000.00