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Discuss sorensen and lucas decide to form a partnership

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Reference no: EM131768656

The post-closing trial balances of two proprietorships on January 1, 2014, are presented below.

Sorensen Company Lucas Company
Dr. Cr. Dr. Cr.
Cash $14,210 $11,950
Accounts receivable 17,740 25,680
Allowance for doubtful accounts $3,100 $4,310
Inventory 26,800 18,340
Equipment 45,020 28,890
Accumulated depreciation-equipment 24,020 11,340
Notes payable 18,480 14,620
Accounts payable 22,090 31,480
Sorensen, capital
 36,080
Lucas, capital
 23,110
$103,770 $103,770 $84,860 $84,860

Sorensen and Lucas decide to form a partnership, Solu Company, with the following agreed upon valuations for noncash assets.

Sorensen Company
 Lucas Company
Accounts receivable $17,740 $25,680
Allowance for doubtful accounts 4,960 4,400
Inventory 28,120 20,000
Equipment 25,060 15,780

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 Sorensen will invest an additional $5,130 in cash, and Lucas will invest an additional $21,820 in cash.

Reference no: EM131768656

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