Question

Austin Fisher contributed land, inventory, and $36,000 cash to a partnership. The land had a book value of $120,000 and a market value of $175,000. The inventory had a book value of $50,000 and a market value of $42,000. The partnership also assumed a $35,000 note payable owed by Fisher that was used originally to purchase the land. Provide the journal entry for Fisher

Answer 1

Answer:

                                Debit Credit

Cash                       36,000  

Land                       175,000  

Inventory                      42,000  

Accounts Payable                   35,000

Austin Fisher, Capital           218,000

                               253,000 253,000

Explanation:

It is necessary before making the accounting entry, to determine which entry value will be given to the equity components.

The land and inventory must be valued at their market value .

It must be taken into account that there is a debt that affects the land and it must be canceled by the partnership. It will be registered on accounts payable.