Mike Derr and Mark Finger form a partnership by combining assets of their separate businesses. The followingbalance sheet is from Derr’s sole proprietorship. The market value of Derr’s equipment is $5,000and the market value of land is $8,000. Prepare the partnership’s journal entry to record Derr’s investment. Balance SheetAssetsLiabilitlesCash...$ 1,000Accounts payable.$ 4,500Supplies..3,000Notes payable.3,100Equipment...$11,000Total liabilities.7,600Accumulated depreciation-Equip....(9,000)2,0004,000$10,000EquityM. Derr, Capital.....Total liabilities and equity.Land....2,400$10,000Total assets.

Partnership: It is a type of business form. Under this business form, two or more individuals…

Answered: Balance Sheet Assets Liabilitles…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Mike Derr and Mark Finger form a partnership by combining assets of their separate businesses. The following
balance sheet is from Derr’s sole proprietorship. The market value of Derr’s equipment is $5,000
and the market value of land is $8,000. Prepare the partnership’s journal entry to record Derr’s investment.

Balance Sheet
Assets
Liabilitles
Cash...
$ 1,000
Accounts payable.
$ 4,500
Supplies..
3,000
Notes payable.
3,100
Equipment...
$11,000
Total liabilities.
7,600
Accumulated depreciation-Equip....
(9,000)
2,000
4,000
$10,000
Equity
M. Derr, Capital.....
Total liabilities and equity.
Land....
2,400
$10,000
Total assets.

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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