Question

Angela Moss and Autumn Barber organize a partnership on January 1. Moss's initial net investment is $92,000, consisting of cash ($30,000), equipment ($77,000), and a note payable reflecting a bank loan for the new business ($15,000). Barber's initial investment is cash of $37,000. These amounts are the values agreed on by both partners.
Prepare journal entries to record (1) Moss’s investment and (2) Barber’s investment.

Answer 1

Answer:

1. Dr Cash$30,000

Dr Equipment (Long-term asset) $77,000

Cr Share Capital (Owner’s Equity) $92,000

Cr Bank Loan (Liability) $15,000

2.Dr Cash $37,000

Cr Share Capital (Owner’s Equity) $37,000

Explanation:

1. Preparation for the journal entries to record Moss’s investment

Dr Cash$30,000

Dr Equipment (Long-term asset) $77,000

Cr Share Capital (Owner’s Equity) $92,000

Cr Bank Loan (Liability) $15,000

( Being to record initial capital investment of Moss’s )

2. Preparation for the journal entries to record Barber’s investment

Dr Cash $37,000

Cr Share Capital (Owner’s Equity) $37,000

( Being to record initial capital investment of Barber's )