Question

Nal, Pat and Gay are forming a partnership. Nal is to invest cash of P100,000 and stapling equipment originally costing P120,000, but has a market value of P50,000. Pat is to invest cash of P160,000. Gay is to invest cash of P50,000 and a brand new stapling equipment with a regular price of P120,000, but which cost Gay's family business P100,000. The capital balances upon formation are:

a. Nal, P220,000; Pat, P160,000; Gay, P150,000
b. Nal, P150,000; Pat, P160,000; Gay, P170,000
c. Nal, P160,000; Pat, P160,000; Gay, P160,000
d. Nal, P176,666; Pat, P176,667; Gay, P166,667

Answer 1

The capital balances upon formation of the partnership are: Nal, P150,000; Pat, P160,000; Gay, P170,000

Step-by-step explanation:

To determine the capital balances upon formation of the partnership, we need to calculate the total investment of each partner. Nal is investing P100,000 in cash plus a stapling equipment with a market value of P50,000, for a total investment of P150,000. Pat is investing P160,000 in cash. Gay is investing P50,000 in cash plus a stapling equipment with a regular price of P120,000, for a total investment of P170,000. Therefore, the capital balances upon formation of the partnership are:

Nal, P150,000; Pat, P160,000; Gay, P170,000