Question

Catrina Santana contributed a patent, accounts receivable, and $23,000 cash to a partnership. The patent had a book value of $8,000. However, the technology covered by the patent appeared to have significant market potential. Thus, the patent was appraised at $85,000. The accounts receivable control account was $38,000, with an allowance for doubtful accounts of $2,000. The partnership also assumed a $10,000 account payable owed to a Santana supplier. On December 31, provide the journal entry for Santana's contribution to the partnership.

Answer 1

Answer:

Date               Account Title                                      Debit              Credit

12/31               Cash                                               $23,000

                      Patent                                             $85,000

                      Accounts Receivable                    $38,000

                     Accounts Payable                                                    $10,000

                    Allowance for doubtful debt                                    $2,000

                    Capital                                                                      $134,000