Partner A   Partner B       Dr Cr   Dr   Cr   Cash    $ 13,000.00      $ 11,000.00       Acc. Rec    $ 16,000.00      $ 24,000.00

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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I have a scenario where a partnership is forming.  The equipment was origially valued at $41000 with the accumulated depreciation on equipment at $22100 for Partner A and 27000, 10100 for Partner B.THey later agree on Equipment as being valued at 23000 for Partner A and 13800 for Partner B.  How can you calculate the depreciation without the number of years provided for the life of the equipment?

I tried to get this done in a chat but was disconnected.  I thought that if I setup the balance sheet I would be able to derive the depreciation based on the shortfall.

    Partner A   Partner B  
    Dr Cr   Dr   Cr  
Cash    $ 13,000.00      $ 11,000.00      
Acc. Rec    $ 16,000.00      $ 24,000.00      
Allowance for doubtful accts.     $   2,800.00       $   4,000.00  
Inventory    $24,500.00      $16,900.00      
Equipment   $ 41,000.00     $ 27,000.00      
Accum. Depr.-Equip     $22,100.00       $10,100.00  
Notes Payable      $ 16,600.00        $ 13,800.00  
Accts Payable      $ 20,200.00        $ 28,500.00  
Partner A Capital      $ 32,800.00          
Partner B Capital             $ 22,500.00  
     $ 94,500.00  $ 94,500.00    $ 78,900.00    $ 78,900.00  
Partner A and Partner B decide to form a partnership, Sandhill Company, with the following agreed upon valuations for noncash assets.
  Partner A   Partner B
Acc. Rec  $16,000.00    $24,000.00
Allowance for doubtful accts.  $4,100.00   $3,700.00
Inventory  $25,800.00    $18,400.00
Equipment $23,000.00   $13,800.00

All cash will be transferred to the partnership, and the partnership will assume all the liabilities of the two proprietorships.

Prepare separate journal entries to record the transfer of each proprietorship’s assets and liabilities to the partnership

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