Steven Kane and Mary Winter are forming a partnership to develop a theme park ne

Question

Steven Kane and Mary Winter are forming a partnership to develop a theme park near Farr City, Florida. Kane contributes cash of $2,250,000 and land with a current market value of $10,500,000. When Kane purchased the land in 2013, its cost was $6,500,000. The partnership will assume Kane's $3,750,000 note payable on the land. Winter contributes cash of $4,250,000 and equipment with a current market value of $6,250,000. Requirements 1. Journalize the partnership's receipt of assets and liabilities from Kane and from Winter. 2. Compute the partnership's total assets, total liabilities, and total partners' equity immediately after organizing. (Record debits first,then credits, Select the explanation on the Requirement 1. Joumalize the partnership's receipt of assets and liabilities from Kane and from Winter. last line of the journal entry table.) First record the entry for Steven Kane's investment Date Accounts and Explanation Debit Credit Now record the entry for Winter's investment

Explanation / Answer

Answer -

1. Journalising the receipts of assets and liabilities from Kane and Winter

2. Computation of Parnership total assets, total liabilities and total partner's equity immediately after organising -

Date General Journal Debit ($) Credit($) Land    10,500,000 Cash      2,250,000 To Notes Payable      3,750,000 To Kane's Capital a/c      9,000,000 (To record cash and land which is brought in by Kane and issued notes payable for partial amount) Equipment      6,250,000 Cash      4,250,000 To Winter's Capital a/c    10,500,000 (To record cash and equipment which is brought in by Winter and credited capital account)

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