Reference no: EM132960366
Question - Osmena and Pobre are partners sharing profit in the ratio of 6:4. A balance sheet prepared by the partners on April 1, 2019 shows the following balances:
Cash P48,000 Accounts Payable P89,000
Accounts Receivable 92,000 Osmena, Capital 133,000
Inventories 165,000 Pobre, Capital 108,000
Equipment 70,000
Accumulated Depreciation (45,000)
P330,000 P330,000
On this date, the partners agree to admit Reyes as a partner. The terms of the agreement are summarized below:
Assets and liabilities are to be restated as follows:
An allowance for possible uncollectible of P4,500 is to be established.
Inventories are to be restated at their present replacement value of P170,000
Accrued expenses of P4,000 are to be recognized.
Osmena, Pobre and Reyes will divide profits in the ratio of 5:3:2. Capital balances of the partners after the formation of the new partnership are to be in the aforementioned ratio, with Osmena and Pobre making cash settlement between them outside of the partnership to adjust their capitals and Reyes investing cash in the partnership for his interest.
Required -
a. Find the total capital of the partnership after the admission of Reyes?
b. Find the cash settlement between Osmena and Pobre?