Kimberly Payne and Arionna Maples decide to form a partnership by combining the

Question

Kimberly Payne and Arionna Maples decide to form a partnership by combining the assets of their separate businesses. Payne contributes the following assets to the partnership: cash, $24,290; accounts receivable with a face amount of $171,520 and an allowance for doubtful accounts of $4,420; merchandise inventory with a cost of $90,120; and equipment with a cost of $142,010 and accumulated depreciation of $46,810.

The partners agree that $6,170 of the accounts receivable are completely worthless and are not to be accepted by the partnership, that $4,320 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 $100,820, and that the equipment is to be valued at $78,270.

On December 1, journalize the partnership’s entry to record Payne’s investment. Refer to the Chart of Accounts for exact wording of account titles.

JOURNAL

ACCOUNTING EQUATION

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DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY

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Explanation / Answer

Entry to record admission of Kimberly Payne into the partnership Date Account title Post Ref. Debit Credit Assets Liability Equity Dec.1 Cash 24290 24290 Accounts Receivable 165350 165350 Inventory 100820 100820 Equipment 78270 78270 Allowance for doubtful accounts 4320 -4320 K.Payne, Capital 364410 364410

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