Evan Surridge and Nicholas Tahir have each decided to close their proprietorships and form the ST Partnership on March 1, 20Y2. Surridge contributed equipment and $40,000 cash to the partnership. The equipment originally cost $68,000 with $37,000 of accumulated depreciation associated with the equipment but the partners agreed to value it at $5,000 below its book value. The partnership also assumed $12,000 owed by Surridge on account. Tahir contributed accounts receivable that were recorded on Tahir's proprietorship's books for $29,000 with $4,000 of Allowance for Doubtful Account associated with it. Surridge and Tahir mutually agreed that $5,000 of the receivables are worthless and the accounts receivable reserve should be increased by $1,000. Tahir also contributed inventory with a book value of $33,000 on Tahir's proprietorship's books but has a current market value of $39,000 due to scarcity in the market. Required: Prepare the journal entries, INCLUDING journal entry descriptions, to record to formation of the ST Partnership. You MUST show detailed calculations to support the amounts.
Evan Surridge and Nicholas Tahir have each decided to close their proprietorships and form the ST Partnership on March 1, 20Y2. Surridge contributed equipment and $40,000 cash to the partnership. The equipment originally cost $68,000 with $37,000 of accumulated depreciation associated with the equipment but the partners agreed to value it at $5,000 below its book value. The partnership also assumed $12,000 owed by Surridge on account. Tahir contributed accounts receivable that were recorded on Tahir's proprietorship's books for $29,000 with $4,000 of Allowance for Doubtful Account associated with it. Surridge and Tahir mutually agreed that $5,000 of the receivables are worthless and the accounts receivable reserve should be increased by $1,000. Tahir also contributed inventory with a book value of $33,000 on Tahir's proprietorship's books but has a current market value of $39,000 due to scarcity in the market. Required: Prepare the journal entries, INCLUDING journal entry descriptions, to record to formation of the ST Partnership. You MUST show detailed calculations to support the amounts.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Evan Surridge and Nicholas Tahir have each decided to close their proprietorships and form the
ST Partnership on March 1, 20Y2. Surridge contributed equipment and $40,000 cash to the
partnership. The equipment originally cost $68,000 with $37,000 of accumulated depreciation
associated with the equipment but the partners agreed to value it at $5,000 below its book value.
The partnership also assumed $12,000 owed by Surridge on account. Tahir contributed accounts
receivable that were recorded on Tahir's proprietorship's books for $29,000 with $4,000 of
Allowance for Doubtful Account associated with it. Surridge and Tahir mutually agreed that
$5,000 of the receivables are worthless and the accounts receivable reserve should be increased
by $1,000. Tahir also contributed inventory with a book value of $33,000 on Tahir's
proprietorship's books but has a current market value of $39,000 due to scarcity in the market.
Required: Prepare the journal entries, INCLUDING journal entry descriptions, to record to
formation of the ST Partnership. You MUST show detailed calculations to support the amounts.
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