Problem - The post-closing trial balances of two proprietorships on January 1, 2008, are presented below.
|
Patrick Company
|
Samuelson Company
|
|
Dr.
|
Cr.
|
Dr.
|
Cr.
|
|
Cash
|
$14,000
|
|
$12,000
|
|
|
Accounts receivable
|
17,500
|
|
26,000
|
|
|
Allowance for doubtful debts
|
|
$3,000
|
|
$4,400
|
|
Merchandise inventory
|
26,500
|
|
18,400
|
|
|
Equipment
|
45,000
|
|
29,000
|
|
|
Acc. Depreciation-equipment
|
|
24,000
|
|
11,000
|
|
Notes payable
|
|
18,000
|
|
15,000
|
|
Accounts payable
|
|
22,000
|
|
31,000
|
|
Patrick, Capital
|
|
36,000
|
|
|
|
Samuelson, Capital
|
|
|
|
24,000
|
|
$103,000
|
$103,000
|
$85,400
|
$85,400
|
Patrick and Samuelson decide to form a partnership, Pasa Company, with the following agreed upon valuations for noncash assets.
|
Patrick Company
|
Samuelson Company
|
|
Accounts receivable
|
$17,500
|
$26,000
|
|
Allowance for doubtful debts
|
4,500
|
4,000
|
|
Merchandise inventory
|
28,000
|
20,000
|
|
Equipment
|
21,000
|
16,000
|
All cash will be transferred to the partnership, and the partnership will assume all the liabilities of the two proprietorships. Further, it is agreed that Patrick will invest an additional $5,000 in cash, and Samuelson will invest an additional $19,000 in cash.
Required -
Prepare separate journal entries to record the transfer of each proprietorship's assets and liabilities to the partnership.
Journalize the additional cash investment by each partner.
Prepare a balance sheet for the partnership on January 1, 2008.