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Journalize the additional cash investment by each partner
Course:- Managerial Accounting
Reference No.:- EM13526422




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The post-closing trial balances of two proprietorships on January 1, 2012, are presented below.



Skorr Company


Crane Company


Dr.

Cr.

Dr.

Cr.

Cash

$ 10,000


$ 8,000


Accounts receivable

18,000


30,000


Allowance for doubtful accounts


$ 2,000


$ 3,000

Inventory

35,000


20,000


Equipment

60,000


35,000


Accumulated depreciation-equipment


28,000


15,000

Notes payable


20,000



Accounts payable


30,000


40,000

Skorr, capital


43,000



Crane, capital




35,000


$123,000

$123,000

$93,000

$93,000

Skorr and Crane decide to form a partnership, Commander Company, with the following agreed upon valuations for noncash assets.


Skorr Company

Crane Company

Accounts receivable

$18,000

$30,000

Allowance for doubtful accounts

2,500

4,000

Inventory

38,000

25,000

Equipment

40,000

22,000

All cash will be transferred to the partnership, and the partnership will assume all the liabilities of the two proprietorships. Further, it is agreed that Skorr will invest an additional $3,500 in cash, and Crane will invest an additional $16,000 in cash.

Instructions

(a) Prepare separate journal entries to record the transfer of each proprietorship's assets and liabilities to the partnership.

(b) Journalize the additional cash investment by each partner.

(c) Prepare a classified balance sheet for the partnership on January 1, 2012.




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