Ahne, a sole proprietor owns a daycare center named Azsh™. Her business operation was rapidly expanding but her capacity to support the operation needs and to manage the business was limited. She decided to ask her friend Johnny, to help him in the business. They agreed to be partners in the business, and consequently, the business needs to be converted into a partnership. The data of Azsh™ before the partnership formation were as follows: Cash 80,000.00 Accounts Receivable 50,000.00 Supplies 15,000.00 Land 100,000.00 Building 250,000.00 Accumulated Deprecation (50,000.00) 200,000.00 Furniture and Fixtures 100,000.00 Accumulated Depreciation (20,000.00) 80,000.00 Total Assets 525,000.00 Accounts Payable 25,000.00 Mortgage Payable 120,000.00 Ahne, Capital 380,000.00 Total Liabilities and Owner's Equity 525,000.00 Additional Information: Accounts Receivable is 90% realizable. Land has a fair value of 150% of its book value. Building is undervalued by P 30,000. All other assets are fairly valued. Additional liabilities of P 20,000 should be recognized by Ahne. Johnny will invest cash equivalent to 40% of the net assets of the partnership 12. The adjusted liabilities of Ahne amount to . A. P 165,000 B. P 145,000 C. P 155,000 D. P 175,000 13. The adjusted net assets of Ahne amount to . A. P 435,000 B. P 355,000 C. P 405,000 D. P 455,000 14. The cash investment of Johnny amount to . A. P 303,333 B. P 236,667 C. P 270,000 D. P 290,000

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

ChapterMB: Model-building Problems

Section: Chapter Questions

Problem 9M

See similar textbooks

Related questions

Question

Ahne, a sole proprietor owns a daycare center named Azsh™. Her business operation was rapidly expanding but her capacity to support the operation needs and to manage the business was limited. She decided to ask her friend Johnny, to help him in the business. They agreed to be partners in the business, and consequently, the business needs to be converted into a partnership. The data of Azsh™ before the partnership formation were as follows:

Cash		80,000.00
Accounts Receivable		50,000.00
Supplies		15,000.00
Land		100,000.00
Building	250,000.00
Accumulated Deprecation	(50,000.00)	200,000.00
Furniture and Fixtures	100,000.00
Accumulated Depreciation	(20,000.00)	80,000.00
Total Assets		525,000.00
Accounts Payable		25,000.00
Mortgage Payable		120,000.00
Ahne, Capital		380,000.00
Total Liabilities and Owner's Equity	525,000.00

Additional Information:

Accounts Receivable is 90% realizable.
Land has a fair value of 150% of its book value.
Building is undervalued by P 30,000.
All other assets are fairly valued.
Additional liabilities of P 20,000 should be recognized by Ahne.
Johnny will invest cash equivalent to 40% of the net assets of the partnership

12. The adjusted liabilities of Ahne amount to ____.

A. P 165,000

B. P 145,000

C. P 155,000

D. P 175,000

13. The adjusted net assets of Ahne amount to ____.

A. P 435,000

B. P 355,000

C. P 405,000

D. P 455,000

14. The cash investment of Johnny amount to ____.

A. P 303,333

B. P 236,667

C. P 270,000

D. P 290,000

15. Assuming Johnny will invest cash for a 60% share in the partnership, how much cash should he invest?

A. P 682,500

B. P 607,500

C. P 532,500

D. P 652,500

Expert Solution

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.