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III. Problems.

Sunny Corporation is formed by the incorporation of MP Partnership On June $30,192,$ the date of corporate formation, the trial balance of MP Partnership shows:

$\backslash$table$[[$Cash$,\backslash$table$[[$Debit$]],$Credit$],[$Accounts Receivable,$30,000,],[$Allowance for bad debts,$90,000,],[$Merchandise Inventory,,$7,000],[$Furniture and Equipment,$80,000,],[$Accumulated Depreciation,$50,000,],[$Accounts Payable,,$10,000],[$Mel$,$ Capital,,$33,000],[$Pearl$,$ Capital,,$95,000],[,,105,000],[,250,000,250,000]]$

To reflect the fair market value of certain assets, the partners agreed to the following adjustments:

a$.$ Allowance for doubtful accounts is to be increased to $10\%$ of accounts receivable.

b$.$ Inventory is to adjusted to its current market value of $P96,000.$

The profit and loss sharing ratio between the two partners is $3$:$2$ for Mel and Pearl, respectively. The partners is to receive common shares of the corporation equivalent to the value of the net assets transferred, and in return the same are to be distributed to Mel and Pearl in payment of their shares in the partnership.

INSTRUCTIONS:

Give the journal entries to record the above transactions in the books of the partnership and the corporation.

$2.$ May $1$ The Scheezo Corporation was authorized to issue $2,000$ shares of common stock with a par value of P$100$ per share.

Accountins $2.-$ Partnershin and Cornoration Accounting

$2$ Received the following subscriptions from five incorporators:

$\backslash$table$[[$Garcia$,100$ shares$],[$Sanchez$,100$ shares$],[$Tuazon$,100$ shares$],[$Villanueva$,100$ shares$],[$Lopez$,100$ shares$]]$

$5$ Lopez and Villanueva paid the subscriptions in full, and stock certificates were issued to them.

$10$ The three other incorporators paid one half of their subscriptions.

$13$ Tuazon and Sanchez paid their balances in full, and stock certificates were issued to them.

$15$ After all lawful calls and notices, Garcia defaulted. His stocks were declared delinquent and were offered for sale in a public auction.

$16$ Advertising expenses paid by the corporation amounted to $P700.$

$20$ At the public auction, Santos was the highest bidder for $70$ shares. He paid the balance of the subscription plus advertising costs.

$21$ The stock certificates were issued.

REQUIRED:

a$.$ Entries in the books of the corporation to record the above transactions.

b$.$ Assuming that nobody bid and the corporation made a bid on

c$.$ the unpaid subscriptions, give the necessary entries in the books

d$.$ of the corporation to record the transactions from May $15$ to $21.$

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