E13-2 Accounting for partner investments [10 min] Nan Ferdinand has been operating a student apartment-locator service as a proprietorship. She and Misti Morris have decided to form a partnership. Ferdinand's investment consists of cash, $6000; accounts receivable, $13000; office furniture, $15000; a building, $51000; and a loan payable to the bank, $22000. To determine Nan's equity in the partnership, she and Misti hire an independent valuer. He values all the assets and liabilities at their carrying amount except the building, which has a current market value of $96000. Also, there are additional accounts payable of $5 000 that Nan will contribute. Misti will contribute cash equal to Nan's equity in the partnership.
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is 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, drawings of a partner, etc.
![E13-2 Accounting for partner investments [10 min]
Nan Ferdinand has been operating a student apartment-locator service as a proprietorship.
She and Misti Morris have decided to form a partnership. Ferdinand's investment consists of
cash, $6000; accounts receivable, $13000; office furniture, $15 000; a building, $51000; and a
loan payable to the bank, $22000.
To determine Nan's equity in the partnership, she and Misti hire an independent valuer.
He values all the assets and liabilities at their carrying amount except the building, which
has a current market value of $96000. Also, there are additional accounts payable of
$5 000 that Nan will contribute. Misti will contribute cash equal to Nan's equity in the
partnership.
Requirements
1 Journalise the entry on the partnership books to record Nan's investment.
2 Journalise the entry on the partnership books to record Misti's investment.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9d6686f0-24e3-43de-bc21-a827730605bb%2F327c9ac7-43e4-4959-b4db-3a0f626ad67c%2F10dzgcm_processed.png&w=3840&q=75)
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