Question

Jesse and Tim form a partnership by combining the assets of their separate businesses. Jesse contributes accounts receivable with a face amount of $47,000 and equipment with a cost of $177,000 and accumulated depreciation of $99,000. The partners agree that the equipment is to be valued at $68,100, that $3,800 of the accounts receivable are completely worthless and are not to be accepted by the partnership, and that $1,800 is a reasonable allowance for the uncollectibility of the remaining accounts receivable. Tim contributes cash of $21,500 and merchandise inventory of $45,500. The partners agree that the merchandise inventory is to be valued at $49,000. Journalize the entries to record in the partnership accounts (a) Jesse's investment and (b) Tim's investment. If an amount box does not require an entry, leave it blank.

Answer 1

Answer:

Explanation:

The journal entries are shown below:

a. For Jesse's investment

Account receivable A/c Dr $43,200     ($47,000 - $3,800)

Equipment A/c Dr $68,100

      To Allowance for Doubtful Debts A/c $1,800

       To Jesse,Capital A/c (Balancing figure) $109,500

(Being the investment is recorded)

b. For Tim's investment

Cash A/c Dr $21,500

Inventory A/c Dr $49,000

      To Tim capital A/c (Balancing figure)  $70,500

(Being the investment is recorded)