The post closing trial balances of two proprietorships on January 1, 2012, are presented below.
|
Williams Compan0079 |
Jones Company |
|||
|
Dr. |
Cr. |
Dr. |
Cr. |
|
|
Cash |
$ 14,000 |
$12,000 |
||
|
Accounts receivable |
17,500 |
26,000 |
||
|
Allowance for doubtful accounts |
$ 3,000 |
$ 4,400 |
||
|
Inventory |
26,500 |
18,400 |
||
|
Equipment |
45,000 |
29,000 |
||
|
Accumulated depreciation—equipment |
24,000 |
11,000 |
||
|
Notes payable |
18,000 |
15,000 |
||
|
Accounts payable |
22,000 |
31,000 |
||
|
Williams, capital |
36,000 |
|||
|
Jones, capital |
24,000 |
|||
|
$103,000 |
$103,000 |
$85,400 |
$85,400 |
|
Williams and Jones decide to form a partnership, Wijo Company, with the following agreed upon valuations for noncash assets.
|
Williams Company |
Jones Company |
|
|
Accounts receivable |
$17,500 |
$26,000 |
|
Allowance for doubtful accounts |
4,500 |
4,000 |
|
Inventory |
28,000 |
20,000 |
|
Equipment |
23,000 |
16,000 |
All cash will be transferred to the partnership, and the partnership will assume all the liabilities of the two proprietorships. Further, it is agreed that Williams will invest an additional $5,000 in cash, and Jones will invest an additional $19,000 in cash.
Instructions
(a) Prepare separate journal entries to record the transfer of each proprietorship’s assets and liabilities to the partnership.
(b) Journalize the additional cash investment by each partner.
(c) Prepare a classified balance sheet for the partnership on January 1, 2012.