Question

Jesse and Tim form a partnership by combining the assets of their separate businesses. Jesse contributes accounts receivable with a face amount of $48,000 and equipment with a cost of $177,000 and accumulated depreciation of $104,000. The partners agree that the equipment is to be valued at $68,500, that $3,600 of the accounts receivable are completely worthless and are not to be accepted by the partnership, and that $2,500 is a reasonable allowance for the uncollectibility of the remaining accounts receivable. Tim contributes cash of $22,000 and merchandise inventory of $44,500. The partners agree that the merchandise inventory is to be valued at $48,000.

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:

Check the explanation

Explanation:

Journal Entries to be recorded in the books of Partnership accounts

a)Jesse's Investment

Account Name                                           Debit($)             Credit($)

Accounts Receivable(48,000-3600)            44300  

Equipment(Agreed Price)               68,500  

Allowance for Doubtful Debts                                     2500

Jesse,Capital A/c(Balancing Figure)                   110300

b.Tim's Investment

Account Name                                             Debit($)      Credit($)

Cash                                                              22000  

Inventory(At Agreed price)                             48000  

Tim Capital                                                                         70,000