14. The post-closing trial balances of two proprietorships on January 1, 2020, are presentedbelow.Jafar CompanyHisham Company.Debit ($)Credit $)Debit ($)Credit ($)Cash20,00016,000Account receivable36,00060,000Allowance for doubtful debts4,0006,000Merchandise inventory70,00040,000Equipment120,00070,000Accumulated depreciation – equipment56,00030,000Notes Payable40,000Account Payable60,00080,000Jafar, capital86,000Hisham, capital70,000Total ($)246,000246,000186,000186,000Jafar and Hisham decide to form a partnership, Jafar & Hisham Company, with the followingagreed upon valuations for noncash assets.Jafar Co.Hisham Co.Accounts receivable36,00060,000Allowance for doubtful debts5,0008,000Merchandise Inventory76,00050,000Equipment80,00044,000All cash will be transferred to the partnership, and the partnership will assume all theliabilities of the two proprietorships. Further, it is agreed that Jafar will invest an additional$7,000 in cash, and Hisham will invest an additional $32,000 in cash.Required:a) Prepare separate journal entries to record the transfer of each proprietorship's assetsand 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, 2020.

A journal entry is used to record a business dealings within the accounting records of a business. A…

Answered: 14. The post-closing trial balances of…

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14. The post-closing trial balances of two proprietorships on January 1, 2020, are presented below.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Question

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14. The post-closing trial balances of two proprietorships on January 1, 2020, are presented
below.
Jafar Company
Hisham Company.
Debit ($)
Credit $)
Debit ($)
Credit ($)
Cash
20,000
16,000
Account receivable
36,000
60,000
Allowance for doubtful debts
4,000
6,000
Merchandise inventory
70,000
40,000
Equipment
120,000
70,000
Accumulated depreciation – equipment
56,000
30,000
Notes Payable
40,000
Account Payable
60,000
80,000
Jafar, capital
86,000
Hisham, capital
70,000
Total ($)
246,000
246,000
186,000
186,000
Jafar and Hisham decide to form a partnership, Jafar & Hisham Company, with the following
agreed upon valuations for noncash assets.
Jafar Co.
Hisham Co.
Accounts receivable
36,000
60,000
Allowance for doubtful debts
5,000
8,000
Merchandise Inventory
76,000
50,000
Equipment
80,000
44,000
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 Jafar will invest an additional
$7,000 in cash, and Hisham will invest an additional $32,000 in cash.
Required:
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, 2020.

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