Castillo, Chinee A.

Pamantasan ng Lungsod ng Marikina

3BSA5B PRE 103 – Accounting for Special Transactions

Accounting for Partnership Formation

Activity 2 – Sole Proprietors Form a Partnership

Gab Business
Trial Balance
Debit Credit
Accounts Receivable P 50,000
Notes Receivable 10,000
Merchandise Inventory 80,000
Furniture 40,000
Equipment 30,000
Accounts Payable P 200,000
Gab, Capital 10,000
P 210,000 P 210,000

Marc Business
Trial Balance
Debit Credit
Notes Receivable P 14,000
Merchandise Inventory 50,000
Equipment 60,000
Marc, Capital P 124,000
P 124,000 P 124,000

ADJUSTING ENTRIES:

(a) Gab, Capital 2,000 (a) Note Receivable 1,000

Accounts Receivable 2,000 Marc, Capital 1,000

(b) Merchandise Inventory 20,000 (b) Merchandise Inventory 10,000

Gab, Capital 20,000 Marc, Capital 10,000

fvdv (c) Gab, Capital 3,000 (c) Equipment 10,000

Furniture 3,000 Marc, Capital 10,000

(d) Gab, Capital 5,000 To record adjustments of Marc

Equipment 5,000

To record adjustments of Gab

 Gab, Capital Marc, Capital
Balance P 10,000 Balance P 124,000
Adj. (a) (2,000) Adj. (a) 1,000
(b) 20,000 (b) 10,000
(c) (3,000) (c) 10,000
(d) (5,000) Adjusted Balance P 145,000
Adjusted balance P 20,000

CLOSING ENTRIES:

Gab, Capital 20,000 Marc, Capital 145,000

Accounts Payable 200,000 Notes Receivables 15,000
Account Receivables 48,000 Merchandise Inventory 60,000
Notes Receivables 10,000 Equipment 70,000
Merchandise Inventory 100,000
Furniture 37,000 To close accounts of Marc
Equipment 25,000

To close accounts of Gab

Partnership Formation Entry

Cash 235,000
Accounts Receivable 48,000
Notes Receivable 25,000
Merchandise Inventory 160,000
Furniture 37,000
Equipment 95,000
Accounts Payable 200,000
Gab, Capital 200,000
Marc, Capital 200,000

To record investment of partners

 Gab and Mark Business
Balance Sheet

ASSETS
Current Assets
Cash 235,000
Accounts Receivable 48,000
Notes Receivable 25,000
Merchandise Inventory 160,000 P 468,000

Noncurrent Assets
Furniture 37,000
Equipment 95,000 132,000
Total Assets P 600,000

LIABILITIES AND CAPITAL

Liabilities
Accounts Payable P 200,000

Capital
Gab, Capital P 200,000
Marc, Capital 200,000 400,000
Total Liabilities and Capital P 600,000