Chapter 01 - Dayag

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Dayag Solution Manual

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<ul><li><p>5/19/2018 Chapter 01 - Dayag</p><p> 1/16</p><p>Advanced Accounting Solution ManualAntonio J. Dayag</p><p>Chapter 1</p><p>Problem I</p><p>Requirement 1Assuming that A and B agree that each partner is to receive a capitalcredit equal to the agreed values of the net assets each partner invested:!o record ad"u#tment#nothing to adjust since both of them have no set of books.!o clo#e the boo$#nothing to close since both of them have no set of books.!o record inve#tment# Partnership books:</p><p>Cash. 120,000Inventory. 120,000Equipment.. 240,000</p><p>A, capital... 480,000Initial investment.</p><p>Cash.. 120,000</p><p>Lan.. 240,000!uilin". 480,000#ort"a"e paya$le. 240,000!, capital.. %00,000</p><p>Initial investment.</p><p>Requirement %Assuming that Aand B agree that each partner is to receive an equalcapital interest.!o record ad"u#tment#nothing to adjust since both of them have no set of books.!o clo#e the boo$#nothing to close since both of them have no set of books.!o record inve#tment# Partnership books: &amp;onu# Approach</p><p>Cash 120,000Inventory 120,000Equipment. 240,000</p><p>A, capital.. 480,000</p><p>Cash 120,000Lan. 240,000!uilin" 480,000</p><p>#ort"a"e paya$le 240,000!, capital.. %00,000</p><p>!, capital.. %0,000A, capital %0,000</p><p> Total agreed capital (P4!"!!! # P$!!"!!!%&amp;.P '"!!"!!! ultiplied b): *apital interest (equal%&amp;&amp;&amp;... '+, Partner-s individual capital interest&amp;&amp;&amp;&amp;&amp;.P 4!"!!!</p><p>/ess: A-s capital interest&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;..&amp;.4!"!!! Bonus to A&amp;&amp;.&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;..P $!"!!!</p></li><li><p>5/19/2018 Chapter 01 - Dayag</p><p> 2/16</p><p> Revaluation '(ood)ill* ApproachCash 120,000Inventory 120,000Equipment. 240,000</p><p>A, capital.. 480,000</p><p>Cash 120,000Lan. 240,000!uilin"... .480,000</p><p>#ort"a"e paya$le 240,000!, capital..%00,000</p><p> Assets &amp;or "oo'ill or intan"i$le asset(... 120,000A, capital.... 120,000</p><p>)otal a"ree capital &amp;*%00,000 + 1+2(...*1,200,000Less )otal contri$ute capital &amp;*480,000 -</p><p>* %00,000(.... 1,080,000oo'ill to A...* 120,000</p><p>Problem II</p><p>Agreed 0air 1alues2nvested</p><p> b) 3ohn2nvested b) 3e</p><p>2nvested b) 3ane</p><p>*ash P'!!"!!! 5 5 5 5 5 56quipment P ''!"!!! 5 5 5</p><p>Total assets '!!"!!! P ''!"!!! !7ote pa)able assumed b) partnership 5 5 5 8!"!!! 5 5 57et assets invested P'!!"!!! P !"!!! P !</p><p>1. &amp;onu# Method %. (ood)ill Method 'Revaluation o+A##et**ash '!!"!!!</p><p>*ash '!!"!! 6quipment ''!"!!!</p><p>6quipment ''!"!! 9oodill ;!"!!!</p><p>7ote Pa)able 7ote Pa)able 8!"!!</p><p>3ohn" *apital 3ohn" *apital ;!"!!</p><p>3e" *apital 3e" *apital ;!"!!</p><p>3ane" *apital 3ane" *apital ;!"!!</p><p>,. The bonus method is used hen3ohn and 3e recognis capital account.</p><p>The goodill method is used hen the partners recogni</p></li><li><p>5/19/2018 Chapter 01 - Dayag</p><p> 3/16</p><p>the partners. @nless the intangible asset can be speci=call) identi=ed" such as a patentbeing invested" it should not be recogni</p></li><li><p>5/19/2018 Chapter 01 - Dayag</p><p> 4/16</p><p>Adjusting entries 7+A Ges*losing entries (real accounts% 7+A 7o2nvestments GesJJBalance Dheet Ges</p><p> J Books of ?K Partnership books JJ 2nvestments of individualK additional investments or ithdraals of sole proprietor.</p><p>1. Books of Sole Proprietor (H):a. !o record ad"u#tment#</p><p>a. /, capital 1,800Allo'ance or ou$tul accounts. 1,800</p><p> Aitional provision compute as ollo'sequire allo'ance 10 3 *48,000 * 4,800Less *revious $alance 5,000</p><p>Aitional provision * 1,800</p><p>$. Interest receiva$le or accrue interest income. 5,%00/, capital 5,%00</p><p> Interest income or nine months compute as ollo's</p><p>*%0,000 3 8 3 6+12 *5,000.</p><p>c. /, capital.. %,000#erchanise inventory.. %,000</p><p>7ecline in the value o merchanise. *2,000 9 *21,000 *%,000.</p><p>. /, capital. 4,800Accumulate epreciation. 4,800</p><p>:ner epreciation.</p><p>e. *repai e3penses... 2,400/, capital 2,400</p><p> E3penses pai in avance.</p><p> /, capital ,200Accrue e3penses. ,200</p><p>:nrecore e3penses.</p><p>oteAll adjustment that reLects nominal accounts should be coursedthrough the capital account" since all nominal accounts are alread) closed atthe time of formation.</p><p>b. !o clo#e the boo$#nothing to close since the books of ? ill be retained.c. !o record inve#tment</p><p>Cash. 11%,100</p><p>I, capital 11%,100</p><p>Initial investment compute as ollo's:na;uste capital o /* 24%,000</p><p>A &amp;euct( a;ustmentsa. 7ou$tul accounts......&amp; 1,800($. Interest income.. 5,%00c. 7ecline in the value o merchanise.&amp; %,000(. :ner</p></li><li><p>5/19/2018 Chapter 01 - Dayag</p><p> 5/16</p><p> Accrue e3penses...&amp; ,200(A;uste capital $alance o /.....* 252,2007ivie $y Capital interest o / 2+5)otal a"ree capital..* 548,500#ultiplie $y Capital interest o I.. 1+5Investment o I* 11%,100</p><p>oteThe initial investment of ? is alread) recorded since his books arealread) retained. 7o further entr) is required since there are no additionalinvestments or ithdraals made b) ?.</p><p>,. The balance sheet for both cases presented above is as follos:</p><p>?2 PartnershipBalance Dheet</p><p>7ovember '" ,!H4</p><p>Assets*ash P ,8$"'!!</p><p>Accounts receivables P 4"!!!/ess: Alloance for doubtfulaccounts&amp;&amp;&amp;...........</p><p> 4"!! 48",!!</p><p>7otesreceivable&amp;&amp;...................................................</p><p>$!"!!!</p><p>2nterestreceivable&amp;&amp;&amp;&amp;&amp;&amp;..................................</p><p>8"$!!</p><p>erchandise2nventor)................................................</p><p>,'"!!!</p><p>PrepaideHpenses&amp;&amp;&amp;&amp;..........................................</p><p>,"4!!</p><p>6quipment (net%&amp;&amp;&amp;&amp;.............................................</p><p>P F,"!!!</p><p>/ess: Accumulated depreciation&amp;&amp;&amp;&amp;&amp;&amp;........ '!"!! $'",!!TotalAssets....................................................................</p><p>P 4,F"!!</p><p>/iabilities and *apital/iabilities AccruedeHpenses&amp;&amp;.. .......................................</p><p>P F",!!</p><p> Accountspa)able...................................................</p><p> ',"!!!</p><p> 7otespa)able&amp;&amp;&amp;&amp;...........................................</p><p> $!"!!!</p><p>Total/iabilities................................................................</p><p>P F;",!!</p><p>*apital........................................................................... ?"capital&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;..................................</p><p>P ,8,",!!</p><p> 2"capital&amp;&amp;&amp;&amp;&amp;&amp;&amp;...........................................</p><p> ''$"'!!</p></li><li><p>5/19/2018 Chapter 01 - Dayag</p><p> 6/16</p><p>Total*apital..................................................................</p><p>P 84"8!!</p><p>Total /iabilities and*apital..........................................</p><p>P 4,F"!!</p><p>Problem ,</p><p>e) #et o+ boo$#. The folloing procedures are to be folloed:</p><p>Dole Proprietor versus Dole ProprietorBooks of</p><p>DoleProprietor(Baker%</p><p>Books ofDole</p><p>Proprietor(*arter%</p><p>J7e Det ofBooks</p><p>Adjusting entries Ges Ges*losing entries (realaccounts%</p><p> Ges Ges</p><p>2nvestments GesJJBalance Dheet Ges</p><p> J Partnership books JJ Additional investments or ithdraals of sole proprietors.</p><p>1. Books of Sole Proprietora. !o record ad"u#tment#</p><p>&amp;oo$# o+ J &amp;oo$# o+ / a. 3" capital&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;',"!!! erchandise 2nventor)&amp;&amp;',"!!! Iorthless inventor).</p><p>a. erchandise 2nventor)&amp;&amp;&amp;&amp; $"!!! M" capital&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;$"!!! @pard revaluation.</p><p>b. 3" capital&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp; F",!! Alloance for doubtful</p><p> Accounts&amp;&amp;&amp;&amp;&amp;&amp;&amp;..F",!! Iorthless accounts.</p><p>b. M" capital&amp;&amp;&amp;.&amp;&amp;&amp;&amp;&amp;&amp;&amp;. 8"!!! Alloance for doubtful</p><p>accounts&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;.8"!!! Additional provision. equired alloance:</p><p>N H P'!"!!!&amp;&amp;.. P;"!!! /ess: Previous</p><p>Balance&amp;&amp;&amp;.. $"!!! Additional</p><p>Provision....&amp;&amp;&amp;&amp;P8"!!!c. ent receivable&amp;&amp;&amp;&amp;&amp;&amp;&amp;',"!!! 3" capital&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;.',"!!! 2ncome earned.</p><p>c. M" capital&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;. ;"$!! Dalaries pa)able&amp;&amp;&amp;&amp;&amp;&amp;.;"$!! @npaid salaries.</p><p>d. 2nterest receivable&amp;&amp;&amp;&amp;&amp;&amp;&amp;'",!! M" capital&amp;&amp;&amp;&amp;..................'",!! 2nterest income from August 'F to ctober '. P$!"!!! H '$N H 4+8$!</p><p>e. 3" capital&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp; "4!! Cce supplies&amp;&amp;&amp;&amp;&amp;&amp;."4!!</p></li><li><p>5/19/2018 Chapter 01 - Dayag</p><p> 7/16</p><p> 6Hpired oCce supplies.f. 3" capital&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp; $"!!! Accumulated depreciation 5 equipment&amp;&amp;&amp;&amp;&amp;&amp;$"!!! @nder5depreciated.</p><p>g. M" capital&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;',"!!! Accumulated depreciation5 0urniture and =Htures&amp;&amp;&amp;',"!!! @nder5depreciated.</p><p>h. 3" capital&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;. '"!! 2nterest pa)able&amp;&amp;&amp;&amp;&amp;.'"!! 2nterest eHpense from</p><p>3ul) ' to ctober '. P$!"!!! H ',N H 8+',</p><p>i. Patent&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;. 4"!!! M" capital&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;..</p><p>4"!!! @nrecorded patent.@nadjusted capital of 3&amp;&amp;.&amp;&amp;&amp;.P8F,"!!!Add(deduct%: adjustments: a. Iorthless merchandise&amp;&amp;..( ',"!!!% b. Iorthless accounts&amp;&amp;&amp;&amp;.( F",!!% c. ent income&amp;&amp;&amp;&amp;&amp;&amp;.&amp;.',"!!! e. Cce supplies eHpense&amp;&amp;.( "4!!%</p><p> f. Additional depreciation&amp;&amp;( $"!!!% h. 2nterest eHpense&amp;&amp;&amp;&amp;&amp;&amp;( '"!!%Adjusted capital of 3&amp;&amp;&amp;&amp;&amp;&amp;&amp;P84"$!!</p><p>@nadjusted capital of M..&amp;&amp;&amp;&amp;&amp;...P48,"!!!Add(deduct%: adjustments: a. erchandise revaluation&amp;&amp;..$"!!! b. Iorthless accounts&amp;&amp;&amp;&amp;&amp;.( 8"!!!% c. Dalaries&amp;&amp;&amp;&amp;&amp;.&amp;&amp;.&amp;&amp;&amp;..( ;"$!!% d. 2nterest income&amp;&amp;&amp;&amp;&amp;&amp;&amp;..'",!!</p><p> g. Additional depreciation&amp;&amp;&amp;( ',"!!!% h. Patent&amp;&amp;&amp;&amp;.&amp;&amp;&amp;.&amp;&amp;&amp;&amp;.4"!!!Adjusted capital of M&amp;.&amp;&amp;&amp;&amp;&amp;&amp;..P4$,"$!!</p><p>b. !o clo#e the boo$#&amp;oo$# o+ J &amp;oo$# o+ /</p><p>Alloance for doubtfulaccounts................................. ',"!!!</p><p>Accumulated depreciation Oequipment&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp; $!"!!!</p><p>Accounts pa)able&amp;&amp;&amp;&amp;&amp;';"$!!7otes pa)able&amp;&amp;&amp;&amp;&amp;&amp;&amp; $!"!!!2nterest pa)able&amp;&amp;&amp;&amp;&amp;&amp;. '"!!</p><p>3" capital&amp;&amp;.&amp;&amp;&amp;&amp;&amp;&amp;&amp;.84"$!! *ash&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;;!"!!! Accounts receivable&amp;&amp;.,'$"!!! erchandise inventor)&amp;.'!"!!!</p><p>Alloance for doubtfulaccounts................................. ;"!!!</p><p>Accumulated depreciation Ofurniture and =Htures &amp;&amp;&amp;. 8$"!!!</p><p>Accounts pa)able&amp;&amp;&amp;&amp;&amp;. ',!"!!!Dalaries pa)able&amp;&amp;&amp;&amp;&amp;&amp;. ;"$!!M" capital&amp;&amp;.&amp;&amp;&amp;&amp;&amp;&amp;&amp;. 4$,"$!!</p><p>*ash&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;.4"!!! Accounts receivable&amp;&amp;..'!"!!! 7otes receivable&amp;&amp;&amp;&amp;. $!"!!! 2nterest receivable&amp;&amp;&amp;...'",!!</p></li><li><p>5/19/2018 Chapter 01 - Dayag</p><p> 8/16</p><p> Cce supplies&amp;&amp;&amp;&amp;&amp;.,4"!!! 6quipment&amp;&amp;&amp;&amp;&amp;&amp;&amp;.',!"!!! ent receivable&amp;&amp;&amp;&amp;...',"!!!</p><p> *lose the books of 3.</p><p> erchandise inventor)&amp;..'!"!!! 0urniture and =Htures.&amp;&amp;..'44"!!! Patent&amp;&amp;&amp;&amp;.&amp;&amp;&amp;&amp;&amp;.4"!!!</p><p> *lose the books of M..</p><p>%. e) Set o+ &amp;oo$# 0!o record inve#tment#</p><p>*ash&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;. ;!"!!!Accounts receivable&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;.. ,'$"!!</p><p>!erchandiseinventor)&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;..</p><p>'!"!!!</p><p>Ccesupplies&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;..</p><p>,4"!!!</p><p>6quipment (net%&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;...</p><p>$!"!!!</p><p>ent eceivable&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;.. ',"!!! Alloance for doubtfulaccounts&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;.</p><p>',"!!!</p><p> Accountspa)able&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;..</p><p>8;"$!!</p><p> 7otespa)able&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;.</p><p>$!"!!!</p><p> 2nterestpa)able&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;..</p><p>'"!!</p><p> 3"capital&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;</p><p>4$"$!!</p><p>*ash&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;. 4"!!!</p><p>Accounts receivable&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;.. '!"!!!</p><p>7otes receivable&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;. $!"!!!2nterestreceivable&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;..</p><p>'",!!</p><p>erchandiseinventor)&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;..</p><p>'!"!!!</p><p>0urniture and =Htures (net%&amp;..&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;..</p><p>'!"!!!</p><p>Patent&amp;&amp;&amp;&amp;..&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;... 4"!!! Alloance for doubtfulaccounts&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;.</p><p>;"!!!</p><p> Accountspa)able&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;..</p><p>',!"!!!</p><p> Dalaries pa)able&amp;.&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;.</p><p>;"$!!</p><p> M"capital&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;</p><p>4$,"$!!</p><p>8.- I</p><p>@nadjusted capital (refer to 'a% P8F,"!!! P48,"!!!</p></li><li><p>5/19/2018 Chapter 01 - Dayag</p><p> 9/16</p><p>Adjusted capital (refer to 'b% 84"$!! 4$,"$!!7et adjustments (debit%+credit (P ,8"4!!% P 8!"$!!</p><p>4. The balance sheet after formation is as follos:</p><p>3 and M Partnership</p><p>Balance Dheet</p><p>ctober '" ,!H4</p><p>Assets*ash...............................................................................</p><p>P '44"!!!</p><p>Accounts</p><p>receivables .................................................</p><p>P8;$"!!!</p><p>/ess: Alloance for doubtfulaccounts&amp;&amp;&amp;.........</p><p> ,'"!!! 8F"!!!</p><p>7otesreceivable&amp;&amp;...................................................</p><p>$!"!!!</p><p>2nterestreceivable&amp;&amp;&amp;&amp;&amp;&amp;..................................</p><p>'",!!</p><p>entreceivable&amp;&amp;&amp;&amp;&amp;&amp;.......................................</p><p>',"!!!</p><p>erchandise2nventor)................................................</p><p>88!"!!!</p><p>Ccesupplies...............................................................</p><p>,4"!!!</p><p>6quipment (net%&amp;&amp;&amp;&amp;.............................................</p><p>$!"!!!</p><p>0urniture and =Htures (net%&amp;&amp;&amp;&amp;&amp;&amp;&amp;.................</p><p>'!"!!!</p><p>Patent&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;...............................................</p><p> 4"!!!</p><p>TotalAssets....................................................................</p><p>P'"'$,",!!</p><p>/iabilities and *apital/iabilities Dalaries</p><p>pa)able&amp;&amp;&amp;&amp;&amp;...................................</p><p>P ;"$!!</p><p> Accountspa)able..................................................</p><p> ';"$!!</p><p> 7otespa)able&amp;&amp;&amp;&amp;..........................................</p><p>$!"!!!</p><p> 2nterestpa)able&amp;&amp;&amp;&amp;&amp;....................................</p><p> '"!!</p><p>Total/iabilities..............................................................</p><p>P ,8'"!!!</p></li><li><p>5/19/2018 Chapter 01 - Dayag</p><p> 10/16</p><p>.*apital 3"capital&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;..................................</p><p>P 4$"$!!</p><p> M"capital&amp;&amp;&amp;&amp;&amp;&amp;&amp;.........................................</p><p> 4$,"$!!</p><p>Total*apital..................................................................</p><p>P ;8'",!!</p><p>Total /iabilities and*apital..........................................</p><p>P'"'$,",!!</p><p>Problem ,I'. Total assets O P'"!;4"!!!" at fair value,. Total liabilities 5 P4!"!!!" at fair value8. Total capital 5 P4"!!! (P'"!;4"!!! O P4!"!!!%</p><p>Balance Dheet3anuar) '" ,!!;A##et# iabilitie# and</p><p>Capital*ash P</p><p>F!"!!!/iabilities</p><p>Account eceivable (net% '!"!!! Accounts Pa)able P';!"!!!</p><p>erchandise 2nventor) ,!"!!! ortgage Pa)able 8!"!!!</p><p>Building (net% $!!"!!! Total /iabilities P4!"!!!</p><p>0urniture and 0iHture (net% '!"!!! *apital:Accounts Pa)able /" *apital P</p><p>,$!"!!!ortgage Pa)able " *apital ,;4"!!!</p><p>Total *apital P4"!!!</p><p>Total Assets P'"!;4"!!!</p><p>Total /iabilities and*apital</p><p>P'"!;4"!!!</p><p>Multiple Choice Problem#'. c O P4"!!!,. d O the prevailing selling price hich is also the fair market value.8. b 5 (P4!!"!!! 5 P';!"!!!% # QP,F!"!!! 5 (P4!!"!!! 5 P';!"!!!%R+8 S P,8!"!!!4.c.b 5 P$!"!!! # P!"!!! # P'!!"!!! S P,4!"!!!$. c 5 P8!"!!! # P!"!!! # P,"!!! S P'!"!!!+8 S P8"!!! 5 P8!"!!! S P"!!!F. a</p><p>Total Agreed *apital (P!"!!!+4!N%&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;...............</p><p>P',"!!!</p><p>/ess: Total *ontributed *apital (P$"!!! # P!"!!!%&amp;&amp;..................</p><p>''"!!!</p><p>9oodill (revaluation of assets upard% P '!"!!!</p></li><li><p>5/19/2018 Chapter 01 - Dayag</p><p> 11/16</p><p>&amp;&amp;&amp;&amp;&amp;&amp;&amp;..................</p><p>Assets" fair value (P,!"!!! # P$!"!!! # P'"!!!%&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;P ;"!!!/ess: /iabilities assumed&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;..&amp; 8!"!!!Bill" capital..&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp; P $"!!!</p><p>. b The capital balances of Iilliam (II% and artha (% at thedate of partnership formation are determined as follos:Iilliam artha</p><p>*ash P,!"!!! P 8!"!!!2nventor) 5 '"!!!Building 5 4!"!!!0urniture and equipment '"!!! 5</p><p>Total P8"!!! P "!!!/ess mortgage assumed b) partnership ('!"!!!%Amounts credited to capital P8"!!! P F"!!!</p><p>;.c</p><p>6van ?elen@nadjusted capital ;"$, 88"!!Add (deduct% adjustments: Alloance ( % ( 4!% Eepreciation ( ;!!%Adjusted capital ;"!F! 8,"';</p><p>'!. c: 3ones O P!"!!! # P4!!"!!! O P',!"!! S P8$!"!!! Dmith O P4!"!!! # P,!"!!! O P$!"!!! S P,$!"!!!</p><p>''. c O P8"8F4 O refer to 7o. ',',. c O P'F"$F</p><p>@nadjusted capital of **&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;&amp;a</p></li></ul>