Gary Ellis has owned and operated a proprietorship for several years. On January

Question

Gary Ellis has owned and operated a proprietorship for several years. On January 1, he decides to terminate this business and become a partner in the firm of Marin and Ellis. Ellis’s investment in the partnership consists of $15,000 in cash, and the following assets of the proprietorship: accounts receivable $14,000 less allowance for doubtful accounts of $2,000, and equipment $20,000 less accumulated depreciation of $4,000. It is agreed that the allowance for doubtful accounts should be $3,000 for the partnership. The fair value of the equipment is $17,500. Journalize Ellis’s admission to the firm of Marin and Ellis.

Explanation / Answer

Journal Entry in the Books of Marin and Ellis:

Cash a/c Dr 15,000

Accounts Receivabes a/c Dr 14,000

Equipment a/c Dr 17,500

To Partners Capital a/c Cr 43,500

To Allowance for Doubtful Debts a/c Cr 3,000

Related Questions

Navigate

• Browse (All)
• Browse G
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.