[supernatural093]

Hi there. Good Day, I'm in need of help with this problem please? I'm most confused how I should restate the assets and liabilities. I tried using the adjustment of sole proprietorship accounting but I keep getting stuck. And the question was a bit confusing. :(

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Jane and Jessie are partners sharing profits in a 60:40 ratio. A statement of financial position prepared for the partners on April 1, 2015 as follows:

ASSETS		Liabities & Capital
Cash	480,000	Accounts Payable	890,000
Accounts Receivable	920,000	Jane, Capital	1,330,000
Inventories	1,650,000	Jessie, Capital	1,080,000
Equipment	700,000
Less: Accumulated Depreciation	(450,000)
Total Assets	3,300,000	Total Liabilities and Capital	3,300,000

On this date, the partners agreed to admit Tria as a partner. The terms of the agreement are summarize below:

Assets and Liabilities are to be restated as follows:

a. An allowance for possible uncollectibles of 45,000 is to be established.
b. Inventories are to be restated at their present replacement value of 1,700,000.
c. Accrued expenses of 40,000 are to be recognized.

Jane, Jessie and Tria 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 stated ratio, with Jane and Jessie making cash settlement between themselves outside of the partnership to adjust their capitals, and Tria investing cash in the partnership for his interest. Determine how much cash is to be invested by Tria.

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Thank you very much!!

[paraclete]

Well do a new balance sheet to reflect the criteria you have been given. You know what the ratio should be between them this should be reflected in the partnership

[supernatural093]

Do I have to revalue them first before getting Tria's investment?

This is what I did

ASSETS	Adjustment	Adjusted
Cash		480,000
Accounts Receivable	(45,000) Allowance	875,000
Inventories	+50,000	1,700,000
Equipment	(450,000) Accum. Dep'n	250,000
Total Assets		3,305,000

LIABILITIES & EQUITY	Adjustment	Adjusted
Accounts Payable	+40,000 Accrued Exp	930,000
Jane, Capital	(27,000), +30,000, (24,000)	1,309,000
Jessie, Capital	(18,000), +20,000, (16,000)	1,066,000
Total L & E		3,305,000

Is this right? :)) Um, I don't know how to compute for Tria's investment? :D

[paraclete]

What is the ratio of their investment and what amount of cash is needed to place the investments in that ratio I suspect the answer is 600000 but you can be more precise