QUESTION 1 Kumaresan and Cheng are watch repairmen who want to form a partnership and open a jewellery store. An attorney prepares their partnership agreement, which indicates that assets invested in the partnership will be recorded at their fair market value and that liabilities will be assumed at book value. The assets contributed by each partner and the liabilities assumed by the partnership are as the following: Assets Kumaresan Cheng Total Cash 40,000 30,000 70,000 Accounts receivable 52,000 20,000 72,000 Allowance for uncollectable receivable accounts 4,000 3,000 7,000 Supplies 1,000 500 1,500 Equipment 20,000 10,000 30,000 Liabilities Accounts payable 32,000 9,000 41,000 Prepare the journal entries necessary to record the original investments of Kumaresan and Cheng in the partnership.
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
QUESTION 1
Kumaresan and Cheng are watch repairmen who want to form a
The assets contributed by each partner and the liabilities assumed by the partnership are as the following:
|
Assets |
Kumaresan |
Cheng |
Total |
|
Cash |
40,000 |
30,000 |
70,000 |
|
|
52,000 |
20,000 |
72,000 |
|
Allowance for uncollectable receivable accounts |
4,000 |
3,000 |
7,000 |
|
Supplies |
1,000 |
500 |
1,500 |
|
Equipment |
20,000 |
10,000 |
30,000 |
|
Liabilities |
|
|
|
|
Accounts payable |
32,000 |
9,000 |
41,000 |
Prepare the
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