Marilou Malquisto, Ma. Fretchel, and Mark were all successful entrepreneurs.

They believed that once they pulled their resources together and with their combined expertise and managerial skills, they can surely beat the existing competitors in their locality. Their respective post closing trial balance are presented below.

Cash Accounts Receivable Est. Uncollectable Accounts Merchandise Inventory Equipment Accumulated Depreciation Capital They aggreed on the following adjustment

Malquisto 950k 70k (3k) 420k 350k (180k) 1,607,000

Frtchel 850k 90k (5k) 600k 480k (230k) 1,785,000

1) Accounts Receivalbe should have the foll. Probability of collection Malquisto P90% Frectchel 95%and Mark 98% 2) Merchandise should be revalued at 90% less due provision for an allowance for obsolescene 3) Equipment should have the carrying values as follows: Malquisto 165k Fretchel 150k and Mark 180k 4) Each of the prospective partner should level off their cash contribution to 1M Required: 1) Adjusting entries in their respective solee proprietorship book. 2) Closing entries in their respective sole proprietorship book

Cash A/R allowance for Doubt acc. Notes receivalbe Interest recevble Merchandise Equipment

J. Laureto Dr 125k 80k 50k 1k 75k 40k

Cr

M. Auditor Dr 186k 120k

10k

150k 60k

Accum depr A/P Notes Payable Interest Payable J. Laureto M.Auditor 371k Assumption:

15k 50k 20k 500 275k 371k 516k

J. Laureto and M.auditor agreed to combine their business to form partnership . All of the assets and liab are to be taken by the partnership

Requirements: 1) Give the journal entries in the books of the respective single proprietorship to finally close their book 2) Give the journal entries to record the investment of each partners Assumption 2: 1) J. Laureto and M.Auditor have agreed to combine their business to form a partnership. All of the assets and liabilities are to be taken by the partnership, after the ff adjustments are taken in the books of their respective single proprietorship a) Allowance for doubtful accounts should be increased to 20% of the accounts receivable b) Merchandise shoud be reduced by 5% c) Equipment are depreciated 80% Req: 1) Give the necessary journals entries in the book of single proprietorship to adjust and close its books 2) Journal entries in the books of partnership recording the invstments of J.Laureto and M. Auditor the books of partnership