P30 book ORION Dow ent The post-closing trial balances of two proprietorships on

Question

P30 book ORION Dow ent The post-closing trial balances of two proprietorships on January 1, 2017, are presented below Dr. Dr. $12,700 28,000 Cr. Cash Accounts receivable Allowance for doubtful accounts Inventory Equipment $15,000 18,500 $3,200 $4,700 19,500 31,000 48,000 25,400 19,100 23,300 11,700 15,900 32,900 Notes payable Sorensen, capital Lucas, capital 26,000 $109,500 $109,500 $91,200 $91,200 Sorensen and Lucas decide to form a partnership, Solu Company, with the following agreed upon valuations for noncash assets. Allowance for doubtful accounts Inventory Equipment All cash will be transferred to the $18,500 4,800 29,700 26,500 $28,000 4,200 21,200 15,900 All Rights Reserved. A Division of

Explanation / Answer

(a) Jan. 1 Cash 15,000 Accounts Receivable 18,500 Merchandise Inventory 29,700 Equipment 26,500 Allowance for Doubtful Accounts 4,800 Notes Payable 19,100 Accounts Payable 23,300 Sorensen, Capital 42,500 1 Cash 12,700 Accounts Receivable 28,000 Merchandise Inventory 21,200 Equipment 15,900 Allowance for Doubtful Accounts 4,200 Notes Payable 15,900 Accounts Payable 32,900 Lucas, Capital 24,800 (b) Jan. 1 Cash 5,300 Sorensen, Capital 5,300 1 Cash 20,100 Lucas, Capital 20,100 (c) SOLU COMPANY Balance Sheet January 1, 2017 Assets Current assets Cash $ 53,100 ($15,000 + $12,700 + $5,300 + $20,100) Accounts receivable ($18,500 + $28,000) $46,500 Less: Allowance for doubtful accounts ($4,800 + $4,200)      9,000       37,500 Merchandise inventory ($29,700 + $21,200)       50,900 Total current assets    141,500 Property, plant, and equipment Equipment ($26,500 + $15,900)       42,400 Total assets $183,900 Liabilities and Owners’ Equity Current liabilities Notes payable ($19,100 + $15,900) $ 35,000 Accounts payable ($23,300 + $32,900)       56,200 Total current liabilities       91,200 Owners’ equity Sorensen, Capital ($42,500 + $5,300) $47,800 Lucas, Capital ($24,800 + $20,100)    44,900 Total owners’ equity       92,700 Total liabilities and owners’ equity $183,900

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