Question

Kimberly Payne and Arionna Maples decide to form a partnership by combining the assets of their separate businesses. Payne contributes the following assets to the partnership: cash, $24,560; accounts receivable with a face amount of $161,390 and an allowance for doubtful accounts of $4,490; merchandise inventory with a cost of $84,060; and equipment with a cost of $137,580 and accumulated depreciation of $45,680.
The partners agree that $6,080 of the accounts receivable are completely worthless and are not to be accepted by the partnership, that $4,680 is a reasonable allowance for the uncollectibility of the remaining accounts, that the merchandise inventory is to be recorded at the current market price of $99,950, and that the equipment is to be valued at $89,040.
On December 1, journalize the partnership’s entry to record Payne’s investment. Refer to the Chart of Accounts for exact wording of account titles.
Chart Of Accounts
Payne and Arionna Maples
General Ledger
Assets Revenue
1 Cash Sales
2 Petty Cash Interest Revenue
3 Accounts Receivable Expenses
4 Allowance for Doubtful Accounts Cost of Merchandise Sold
5 Interest Receivable Salaries Expense
6 Notes Receivable Advertising Expense
7 Merchandise Inventory Depreciation Expense-Equipment
8 Office Supplies Delivery Expense
9 Store Supplies Repairs Expense
10 Prepaid Insurance Selling Expenses
11 Land Rent Expense
12 Equipment Insurance Expense
13 Accumulated Depreciation-Equipment Office Supplies Expense
14 Asset Revaluations Store Supplies Expense
15 Patent Insurance Expense
Liabilities Credit Card Expense
16 Accounts Payable Cash Short and Over
17 Salaries Payable Bad Debt Expense
18 Sales Tax Payable Miscellaneous Expense
19 Interest Payable Interest Expense
20 Notes Payable
Equity
21 Kimberly Payne, Capital
22 Kimberly Payne, Drawing
23 Arionna Maples, Capital
24 Arionna Maples, Drawing

Answer 1

Answer and Explanation:

The journal entry is shown below:

Cash  Dr $24,560

Accounts receivable Account Dr. $ 155,310   ($161,390 - $6,080)

Merchandise Inventory Account Dr.  $ 99,950

Equipment Account Dr.   $ 89040

       To Kimberly Payne, Capital Account       $364,180

      To Allowance for Doubtful accounts        $4,680

(Being the Payne investment is recorded)

For recording this we debited the cash, account receivable, merchandise inventory, and the equipment as it increased the assets and credited the capital and allowance for doubtful accounts as it increased the stockholder equity and also increased the allowance for doubtful balance