We will use the previous quiz to solve this problem:
Transactions for Sugarpop Partnership during the year 2019 are as follows:
- It was agreed by the partners that additional P10,500 representing provision for uncollectible accounts be recognized.
- Total advances to employees amounting to P22,500 were collected thru salary deductions.
- Agreed amount on inventories was P55,200. This is considered a valuation of inventory between cost and net realizable value.
- Office supplies used amounted to P6,000. Meanwhile, prepaid rent is to be accounted according to the partners’ policy.
- Depreciation for building and equipment was calculated as P142,800 and P33,200 respectively.
- Checks paid to various suppliers amounted to P150,000. Also, portion of notes payable was settled for P55,000.
On December 31, 2019, the partners agreed to admit Rita as a partner in the firm. Assets shall be revalued upward by P70,000 before her admission. Increase of assets attributable to each partner are as follows:
- Renzo: P26,533.37
- Pocholo: P10,696.52
- Vanessa: P14,908.68
- Julie Ann: P17,861.43
Such increase shall be debited to account “Other Non-current Assets.”
Rita is to purchase 25% of each capital of existing partners for P3,500,000. Respective revised Capital and P/L ratios for Renzo, Pocholo, Vanessa, and Julie Ann are 25%, 20%, 15%, and 15%.
Sales for the whole year amounted to P3,991,500, and cost of sales amounted to P41,400.
Distribution of profits shall be as follows:
- Salaries per month: Renzo, P2,400; Pocholo, P3,000; Vanessa, P3,780; Julie Ann, P3,600; Rita, P4,500.
- Interest on 10% of capital balances after Rita’s admission.
- Remainder is to be divided based on new P/L ratios.
- Adjusting entries before and after Rita’s admission.
- Partners’ capital before and after Rita’s admission.
- Income statement for December 31, 2019.
- Schedule of distribution of profits.
- How much shall be the personal gain/loss to be recognized by each partner? (Assume that the cash given to the partners is divided equally.)
P2 Problem prepared by: TweetNewscaster
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