Recording Journal Entries and preparation of balance sheet.
The post-closing trial balances of two proprietorships on January 1, 2008, are presented below.
|
|
Free Company
|
Will Company
|
|
|
Dr.
|
Cr.
|
Dr.
|
Cr.
|
|
Cash
|
$9,500
|
|
$6,000
|
|
|
Accounts receivable
|
15,000
|
|
23,000
|
|
|
Allowance for doubtful accounts
|
|
$2,500
|
|
$4,000
|
|
Merchandise inventory
|
28,000
|
|
17,000
|
|
|
Equipment
|
50,000
|
|
30,000
|
|
|
Accumulated depreciation-equipment
|
|
24,000
|
|
13,000
|
|
Notes payable
|
|
25,000
|
|
|
|
Accounts payable
|
|
20,000
|
|
37,000
|
|
Free, Capital
|
|
31,000
|
|
|
|
Will, Capital
|
|
|
|
22,000
|
|
|
$102,500
|
$102,500
|
$76,000
|
$76,000
|
Free and will decide to form a partnership, Free-Will Company, with the following agreed upon valuations for noncash assets.
|
|
Free Company
|
Will Company
|
|
Accounts receivable
|
$15,000
|
$23,000
|
|
Allowance for doubtful accounts
|
3,500
|
5,000
|
|
Merchandise inventory
|
32,000
|
21,000
|
|
Equipment
|
28,000
|
18,000
|