Question

Jesse and Tim form a partnership by combining the assets of their separate businesses. Jesse contributes accounts receivable with a face amount of $45,000 and equipment with a cost of $175,000 and accumulated depreciation of $101,000. The partners agree that the equipment is to be valued at $68,200, that $3,400 of the accounts receivable are completely worthless and are not to be accepted by the partnership, and that $1,600 is a reasonable allowance for the uncollectibility of the remaining accounts receivable. Tim contributes cash of $22,000 and merchandise inventory of $45,500. The partners agree that the merchandise inventory is to be valued at $49,000.Required:
Journalize the entries to record in the partnership accounts (a) Jesse’s investment and (b) Tim’s investment. Refer to the Chart of Accounts for exact wording of account titles.

Answer 1

Answer:

The Journal entries with their narrations of Jesse’s investment and Tim’s investment is shown below:-

Explanation:

a. Jesse’s investment

Accounts Receivable Dr,                      $41,600

($45,000 - $3,400)

Agreed price of equipment Dr,             $68,200

      To allowance for doubtful debts                 $1,600

       To capital account                                       $108,200

(Being Jesse's investment is recorded)

b. Tim’s investment

Cash Dr,                                           $22,000

Agreed price of inventory Dr,             $49,000

           To Tim capital                                         $71,000

(Being Tim's investment is recorded)