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Garnett and Bryant decided to combine their businesses and form a partnership. Below are their statements of
financial position before the formation:
Garnett Bryant
Cash P2,048,400 P1,098,360
Accounts Receivable 1,031,960 2,498,716
Inventories 528,160 1,144,448
Property and Equipment- net 613,380 852,224
Other Assets 8,800 15,840
The partners agreed that the property and equipment of Garnett is underdepreciated by P80,000 and that of Bryant is
over-depreciated by P200,000. Accounts Receivable of P108,000 in Garnett’s book and P140,000 in Bryant’s book are
uncollectible. The partnership decided to assume the mortgage liability of Bryant. The partnership’s agreement provides
for a profit and loss ratio and capital interest of 60% to Garnett and 40% to Bryant. Bryant is willing to invest or
withdraw cash from the partnership to comply with the agreement.
What are the capital balances of Garnett and Bryant after the formation?