20. Assume that two individuals agree to form a partnership. Partner A is contri
ID: 2586452 • Letter: 2
Question
20. Assume that two individuals agree to form a partnership. Partner A is contributing an operating business that reports the following balance sheet: Cash Receivables Inventories Total assets $120,000 160,000 200,000 $480,000 Accounts payable.$160,000 Accrued liabilities Total liabilities Net assets 120,000 $280,000 $200,000 The partners agree that the initial capital of Partner B is contributing cash of $280,000. the partnership should be shared equally Required: Prepare the journal entry to record the capital contributions of the partners assuming that the partners wish to employ the Bonus Method.Explanation / Answer
Answer :
The journal entry to record the capital contributions of the partners under Bonus Method is
Cash 400,000
Receivables 160,000
Inventories 200,000
Accounts payable 160,000
Accrued liabilities 120,000
Partner A capital 240,000
Partner B capital 240,000
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