Mr. Meekes, Mr. Kadeem, and Ms. Roberts agreed to form the Engineering Redesign

Question

Mr. Meekes, Mr. Kadeem, and Ms. Roberts agreed to form the Engineering Redesign Partnership. Mr. Meekes agreed to contribute $90,000 cash to the partnership. Mr. Kadeem contributes equipment valued at $5,000 and a building with a fair value of $102,000. Ms. Roberts transfers to the partnership cash of $7,000, accounts receivable of $60,000 and equipment worth $30,000. The partnership expects to collect $55,000 of the accounts receivable. Instructions

(a) Prepare the journal entries to record each partner’s contribution

(b) Calculate the total owners’ equity amount upon formation of the partnership.

Explanation / Answer

Solution:

a) Preparing the Journal Entries to Record Each Partner's Contribution:

b) Calculation of the Total Owner's Equity Amount Upon Formation of the Partnership:

Event General Journal Debit Credit a Cash $90,000 Mr. Meekes, Capital $90,000 (To Record the Mr.Meekes Contribution to Partnership) b Equipment $5,000 Building $102,000 Mr. Kadeem, Capital $107,000 (To Record the Mr.Kadeem Contribution to Partnership) c Cash $7,000 Accounts Receivable $60,000 Equipment $30,000 Ms. Roberts, Capital $97,000 (To Record the Mr.Roberts Contribution to Partnership)

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