Accounting 3 4 Exercise Set 1

Accounting 3 & 4
Exercises Set # 1
Lee E.

1. Fred has owned and operated a sole proprietorship for several years. On January 1, he decides to terminate this business and become a partner in the firm Sears and Roebucks. Fred’s investment in the partnership consists of P12,000 in cash, and the following assets of the proprietorship: accounts receivable P14,000 less allowance for doubtful accounts of P2,000, and equipment P20,000 less accumulated depreciation of P4,000. It is agreed that the allowance for doubtful accounts should be P3,000 for the partnership. The fair market value of the equipment is P17,500.

Instructions: Journalize Fred’s admission to the company Sears and Roebucks.

2. The post-closing trial balances of 2 sole proprietorships on January 1, 2005, are presented below:

Dan Company John Company Dr Cr Dr Cr
Cash P9,500 P6,000
Accounts Receivable 15,000 23,000
Allowance for Doubtful Accounts P2,500 P4,000
Merchandise Inventory 28,000 17,000
Equipment 50,000 30,000
Acc. Depreciation- Equipment 24,000 13,000
Notes Payable 20,000
Accounts Payable 25,000 37,000
Dan, Capital 31,000
John, Capital 22,000 ---------- ----------- ----------- ----------- P102,500P102,500 P76,000P76,000 ====== ======= ====== =======
Dan and John decide to form a partnership, Blues Brothers Company, with the following agreed upon valuations for non-cash assets.

Dan Company John Company Accounts Payable P15,000 P23,000 Allowance for Doubtful Accounts 3,500