Kimberly Payne and Arionna Maples decide to form a partnership by combining the
ID: 2509266 • Letter: K
Question
Kimberly Payne and Arionna Maples decide to form a partnership by combining the assets of their separate businesses. Payne contributes the following assets to the partnership: cash, $23,820; accounts receivable with a face amount of $154,070 and an allowance for doubtful accounts of $3,930; merchandise inventory with a cost of $88,010; and equipment with a cost of $123,640 and accumulated depreciation of $48,490.
The partners agree that $5,890 of the accounts receivable are completely worthless and are not to be accepted by the partnership, that $5,120 is a reasonable allowance for the uncollectibility of the remaining accounts, that the merchandise inventory is to be recorded at the current market price of $100,740, and that the equipment is to be valued at $80,180.
On December 1, journalize the partnership’s entry to record Payne’s investment. Refer to the Chart of Accounts for exact wording of account titles.
CHART OF ACCOUNTSPayne and Arionna MaplesGeneral Ledger
ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable 113 Allowance for Doubtful Accounts 114 Interest Receivable 115 Notes Receivable 116 Merchandise Inventory 117 Office Supplies 118 Store Supplies 119 Prepaid Insurance 120 Land 123 Equipment 124 Accumulated Depreciation-Equipment 129 Asset Revaluations 133 PatentExplanation / Answer
Answer
The partnership’s entry to record Payne’s investment:
Date Particulars Dr Cr December 1 Cash $23,820 Accounts Receivables A/c Dr ($154,070 - $5,890) $148,180 Inventory $100,740 Equipment $80,180 Allowance for doubtful Accounts $5,120 Payne's Capital(bf) $347,800 (Being assets contributed by partner in business)Related Questions
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