On October 1, Ara and Ben pooled their assets to form a Partnership, with the firm to take over the business assets and assume liabilities. Partners capitals are to be based on net assets transferred after the following adjustments. The partners agreed to the following adjustments: Ara's inventory is to be increased by 15,000, while Ben's inventory has a current fair market value of 100,000 and an agreed value of 110,000. Ben's unadjusted inventory amounted to 90,000. Machinery and equipment are over-depreciated by 5,000 and 8,000 for Ara and Ben, respectively. Furnitures and fixtures for Ara has a current fair market value of 60,000 and an agreed value of 50,000. Furnitures and fixtures is carried at its cost amount to 100,000 with accumulated depreciation of 45,000. Accrued rent income of 10,000 for Ara and accrued salaries of 5,000 for Ben should be recognized on their respective books. The individual trial balances on October 1, before adjustments, follow: DESCRIPTION Ara Ben Assets 120,000 130,000 Liabilities 50,000 60,000 Determine the total capital balance of the partnership after formation.
On October 1, Ara and Ben pooled their assets to form a Partnership, with the firm to take over the business assets and assume liabilities. Partners capitals are to be based on net assets transferred after the following adjustments. The partners agreed to the following adjustments: Ara's inventory is to be increased by 15,000, while Ben's inventory has a current fair market value of 100,000 and an agreed value of 110,000. Ben's unadjusted inventory amounted to 90,000. Machinery and equipment are over-depreciated by 5,000 and 8,000 for Ara and Ben, respectively. Furnitures and fixtures for Ara has a current fair market value of 60,000 and an agreed value of 50,000. Furnitures and fixtures is carried at its cost amount to 100,000 with accumulated depreciation of 45,000. Accrued rent income of 10,000 for Ara and accrued salaries of 5,000 for Ben should be recognized on their respective books. The individual trial balances on October 1, before adjustments, follow: DESCRIPTION Ara Ben Assets 120,000 130,000 Liabilities 50,000 60,000 Determine the total capital balance of the partnership after formation.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On October 1, Ara and Ben pooled their assets to form a
The partners agreed to the following adjustments:
- Ara's inventory is to be increased by 15,000, while Ben's inventory has a current fair market value of 100,000 and an agreed value of 110,000. Ben's unadjusted inventory amounted to 90,000.
- Machinery and equipment are over-
depreciated by 5,000 and 8,000 for Ara and Ben, respectively. - Furnitures and fixtures for Ara has a current fair market value of 60,000 and an agreed value of 50,000. Furnitures and fixtures is carried at its cost amount to 100,000 with
accumulated depreciation of 45,000. - Accrued rent income of 10,000 for Ara and accrued salaries of 5,000 for Ben should be recognized on their respective books.
- The individual
trial balances on October 1, before adjustments, follow:
| DESCRIPTION | Ara | Ben |
| Assets | 120,000 | 130,000 |
| Liabilities | 50,000 | 60,000 |
Determine the total capital balance of the partnership after formation.
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