On July 1, 20--, Lisa Bush and Wally Dodge combined their two businesses to form a partnership under the firm name of Bush and Dodge. The balance sheets of the two sole proprietorships are shown below. Bush’s Grooming & Pet Supplies Balance Sheet June 30, 20 -- 1 Assets Liabilities 2 Cash $4,600.00 Notes payable $3,600.00 3 Accounts receivable $4,200.00 Accounts payable 7,690.00 4 Less allowance for bad debts 480.00 3,720.00 Total liabilities $11,290.00 5 Merchandise inventory 28,580.00 6 Store equipment $9,260.00 Owner’s Equity 7 Less accumulated depreciation 2,400.00 6,860.00 Lisa Bush, capital 32,470.00 8 Total assets $43,760.00 Total liabilities and owner’s equity $43,760.00 Wally’s Pet World Balance Sheet June 30, 20 -- 1 Assets Liabilities 2 Cash $3,350.00 Notes payable $6,000.00 3 Accounts receivable $4,150.00 Accounts payable 5,500.00 4 Less allowance for bad debts 250.00 3,900.00 Total liabilities $11,500.00 5 Merchandise inventory 27,240.00 6 Supplies 845.00 7 Office equipment $8,830.00 8 Less accumulated depreciation 3,400.00 5,430.00 9 Store equipment $9,175.00 Owner’s Equity 10 Less accumulated depreciation 4,250.00 4,925.00 Wally Dodge, capital 34,190.00 11 Total assets $45,690.00 Total liabilities and owner’s equity $45,690.00 The balance sheets reflect fair market values except for the following: (a) The fair market value of Bush’s store equipment is $7,350. (b) The fair market values of Dodge’s office equipment and store equipment are $5,875 and $6,100, respectively. Required: Prepare the opening entry for the formation of the Bush and Dodge partnership as of July 1, 20--, using fair market values. The difference between assets invested and liabilities assumed should be credited to each partner’s capital account. Neither partner has knowledge of any uncollectible accounts receivable.

On July 1, 20--, Lisa Bush and Wally Dodge combined their two businesses to form a partnership under the firm name of Bush and Dodge. The balance sheets of the two sole proprietorships are shown below. Bush’s Grooming & Pet Supplies Balance Sheet June 30, 20 -- 1 Assets Liabilities 2 Cash $4,600.00 Notes payable $3,600.00 3 Accounts receivable $4,200.00 Accounts payable 7,690.00 4 Less allowance for bad debts 480.00 3,720.00 Total liabilities $11,290.00 5 Merchandise inventory 28,580.00 6 Store equipment $9,260.00 Owner’s Equity 7 Less accumulated depreciation 2,400.00 6,860.00 Lisa Bush, capital 32,470.00 8 Total assets $43,760.00 Total liabilities and owner’s equity $43,760.00 Wally’s Pet World Balance Sheet June 30, 20 -- 1 Assets Liabilities 2 Cash $3,350.00 Notes payable $6,000.00 3 Accounts receivable $4,150.00 Accounts payable 5,500.00 4 Less allowance for bad debts 250.00 3,900.00 Total liabilities $11,500.00 5 Merchandise inventory 27,240.00 6 Supplies 845.00 7 Office equipment $8,830.00 8 Less accumulated depreciation 3,400.00 5,430.00 9 Store equipment $9,175.00 Owner’s Equity 10 Less accumulated depreciation 4,250.00 4,925.00 Wally Dodge, capital 34,190.00 11 Total assets $45,690.00 Total liabilities and owner’s equity $45,690.00 The balance sheets reflect fair market values except for the following: (a) The fair market value of Bush’s store equipment is $7,350. (b) The fair market values of Dodge’s office equipment and store equipment are $5,875 and $6,100, respectively. Required: Prepare the opening entry for the formation of the Bush and Dodge partnership as of July 1, 20--, using fair market values. The difference between assets invested and liabilities assumed should be credited to each partner’s capital account. Neither partner has knowledge of any uncollectible accounts receivable.

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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Bush’s Grooming & Pet Supplies

Balance Sheet

June 30, 20 --

1	Assets			Liabilities
2	Cash		$4,600.00	Notes payable	$3,600.00
3	Accounts receivable	$4,200.00		Accounts payable	7,690.00
4	Less allowance for bad debts	480.00	3,720.00	Total liabilities		$11,290.00
5	Merchandise inventory		28,580.00
6	Store equipment	$9,260.00		Owner’s Equity
7	Less accumulated depreciation	2,400.00	6,860.00	Lisa Bush, capital		32,470.00
8	Total assets		$43,760.00	Total liabilities and owner’s equity		$43,760.00

Wally’s Pet World

Balance Sheet

June 30, 20 --

1	Assets			Liabilities
2	Cash		$3,350.00	Notes payable	$6,000.00
3	Accounts receivable	$4,150.00		Accounts payable	5,500.00
4	Less allowance for bad debts	250.00	3,900.00	Total liabilities		$11,500.00
5	Merchandise inventory		27,240.00
6	Supplies		845.00
7	Office equipment	$8,830.00
8	Less accumulated depreciation	3,400.00	5,430.00
9	Store equipment	$9,175.00		Owner’s Equity
10	Less accumulated depreciation	4,250.00	4,925.00	Wally Dodge, capital		34,190.00
11	Total assets		$45,690.00	Total liabilities and owner’s equity		$45,690.00

The balance sheets reflect fair market values except for the following:

(a)	The fair market value of Bush’s store equipment is $7,350.
(b)	The fair market values of Dodge’s office equipment and store equipment are $5,875 and $6,100, respectively.

Required:

Prepare the opening entry for the formation of the Bush and Dodge partnership as of July 1, 20--, using fair market values. The difference between assets invested and liabilities assumed should be credited to each partner’s capital account. Neither partner has knowledge of any uncollectible accounts receivable.

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