Amber Moss and Latoya Pell decide to form a partnership by combining the assets

Question

Amber Moss and Latoya Pell decide to form a partnership by combining the assets of their separate businesses. Moss contributes the following assets to the partnership: cash, $15,000; accounts receivable with a face amount of $159,000 and an allowance for doubtful accounts of $9,700; merchandise inventory with a cost of $100,000; and equipment with a cost of $155,000 and accumulated depreciation of $100,000. The partners agree that $6,000 of the accounts receivable are completely worthless and are not to be accepted by the partnership, that $11,400 is a reasonable allowance for the uncollectibility of the remaining accounts, that the merchandise inventory is to be recorded at the current market price of $91,450, and that the equipment is to be valued at $62,500. Journalize the partnership's entry to record Moss's investment. For a compound transaction, if an amount box does not require an entry, leave it blank or enter "0".

Explanation / Answer

Moss's contribution: Cash A/c Dr $15000 Accounts Receivable A/c Dr 153,000 Allowance for doubtful debts A/c Dr 11,400 Inventory A/c Dr 91450 Equipment A/c Dr 62500 Accumulated Depreciation A/c Dr 100,000 To Moss's Capital A/c $ 433,350 (Being Moss admitted to the partnership)

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