The post-closing trial balances of two proprietorships on January 1, 2022, are presented below. Cash Accounts receivable Allowance for doubtful accounts Inventory Equipment Accumulated depreciation-equipment Notes payable Accounts payable Sorensen, capital Lucas, capital Accounts receivable Allowance for doubtful accounts Sorensen Company Inventory Equipment Dr. $14,000 17,500 26,500 45,000 Sorensen Company $17,500 4,500 Cr. 28,000 $3,000 25,000 24,000 18,000 22,000 36,000 $103,000 $103,000 $85,400 $12,000 26,000 Lucas Company $26,000 Dr. 4,000 Sorensen and Lucas decide to form a partnership, Solu Company, with the following agreed upon valuations for noncash assets. 20,000 18,400 Lucas Company 15,000 29,000 Cr. $4,400 11,000 15,000 31,000 24,000 $85,400 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. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
The post-closing trial balances of two proprietorships on January 1, 2022, are presented below. Cash Accounts receivable Allowance for doubtful accounts Inventory Equipment Accumulated depreciation-equipment Notes payable Accounts payable Sorensen, capital Lucas, capital Accounts receivable Allowance for doubtful accounts Sorensen Company Inventory Equipment Dr. $14,000 17,500 26,500 45,000 Sorensen Company $17,500 4,500 Cr. 28,000 $3,000 25,000 24,000 18,000 22,000 36,000 $103,000 $103,000 $85,400 $12,000 26,000 Lucas Company $26,000 Dr. 4,000 Sorensen and Lucas decide to form a partnership, Solu Company, with the following agreed upon valuations for noncash assets. 20,000 18,400 Lucas Company 15,000 29,000 Cr. $4,400 11,000 15,000 31,000 24,000 $85,400 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. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Transcribed Image Text:The post-closing trial balances of two proprietorships on January 1, 2022, are presented below.
Cash
Accounts receivable
Allowance for doubtful accounts
Inventory
Equipment
Accumulated depreciation-equipment
Notes payable
Accounts payable
Sorensen, capital
Lucas, capital
Accounts receivable
Allowance for doubtful accounts
Sorensen Company
Inventory
Equipment
Dr.
$14,000
17,500
26,500
45,000
$17,500
4,500
Cr.
28,000
$3,000
25,000
24,000
18,000
22,000
Date Account Titles and Explanation
36,000
$103,000 $103,000 $85,400
$12,000
Sorensen Company Lucas Company
Lucas Company
$26,000
Dr.
4,000
Sorensen and Lucas decide to form a partnership, Solu Company, with the following agreed upon valuations for noncash assets.
20,000
26,000
15,000
18,400
29,000
Cr.
$4,400
11,000
Debit
15,000
31,000
24,000
$85,400
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. (Credit
account titles are automatically indented when amount is entered. Do not indent manually.)
Credit
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