Elias, Gally and Mario are sole proprietors who decided to merge their businesses to form a partnership in the name of ELGAMA. Their respective books of accounts show the following unadjusted trial balances before partnership formation: Elias Gally Mario Cash 20,000 100,000 80,000 Accounts Receivable 150,000 70,000 120,000 Merchandise Inventory 200,000 50,000 160,000 Furniture & fixtures 30,000 90,000 20,000 Store Equipment 60,000 40,000 0 Prepaid Expenses 0 0 10,000 Accounts Payable 100,000 160,000 40,000 Notes Payable 0 0 150,000 Capital ? ? ? The following adjustments were agreed upon by the partners: Prepaid expenses and liabilities will not be assumed by the partnership. Merchandise inventory will be valued at 90%. Accounts Receivable are ascertained to be 5% uncollectible. Fixed assets are to be valued at 75%. Partners’ capital would be equivalent to the net assets contributed. Required: 3a. Journal entries to record the investments of the partners. 3b. Statement of Financial Position upon partnership formation.

Elias, Gally and Mario are sole proprietors who decided to merge their businesses to form a partnership in the name of ELGAMA. Their respective books of accounts show the following unadjusted trial balances before partnership formation: Elias Gally Mario Cash 20,000 100,000 80,000 Accounts Receivable 150,000 70,000 120,000 Merchandise Inventory 200,000 50,000 160,000 Furniture & fixtures 30,000 90,000 20,000 Store Equipment 60,000 40,000 0 Prepaid Expenses 0 0 10,000 Accounts Payable 100,000 160,000 40,000 Notes Payable 0 0 150,000 Capital ? ? ? The following adjustments were agreed upon by the partners: Prepaid expenses and liabilities will not be assumed by the partnership. Merchandise inventory will be valued at 90%. Accounts Receivable are ascertained to be 5% uncollectible. Fixed assets are to be valued at 75%. Partners’ capital would be equivalent to the net assets contributed. Required: 3a. Journal entries to record the investments of the partners. 3b. Statement of Financial Position upon partnership formation.

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter12: Accounting For Partnerships And Limited Liability Companies

Section: Chapter Questions

Problem 4PB

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bartleby, a Learneo, Inc. business

	Elias	Gally	Mario
Cash	20,000	100,000	80,000
Accounts Receivable	150,000	70,000	120,000
Merchandise Inventory	200,000	50,000	160,000
Furniture & fixtures	30,000	90,000	20,000
Store Equipment	60,000	40,000	0
Prepaid Expenses	0	0	10,000
Accounts Payable	100,000	160,000	40,000
Notes Payable	0	0	150,000
Capital	?	?	?