Sue and Marty are watch repairmen who want to form a partnership and open a jewelry 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 follow. Assets Sue Marty Total Cash $40,000 $30,000 $70,000 Accounts Receivable 52,000 20,000 72,000 Allowance for uncollectible 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 Sue and Marty in the partnership.
Sue and Marty are watch repairmen who want to form a partnership and open a jewelry 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 follow. Assets Sue Marty Total Cash $40,000 $30,000 $70,000 Accounts Receivable 52,000 20,000 72,000 Allowance for uncollectible 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 Sue and Marty in the partnership.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Sue and Marty are watch repairmen who want to form a
jewelry 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
follow.
| Assets | Sue | Marty |
Total |
| Cash | $40,000 | $30,000 | $70,000 |
| 52,000 | 20,000 | 72,000 | |
| Allowance for uncollectible 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
Marty in the partnership.
Expert Solution
Step 1
Journal entries are prepared to record the financial and non-financial transactions of the business and it has two sides debit and credit which should be always equal.
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