Tammie Pike and Gail Smith agree to combine their businesses and form a and the

Question

Tammie Pike and Gail Smith agree to combine their businesses and form a and the carrying amount of the assets contributed by each partner a partnership are shown below and the liabilities assumed by the Tammie Pike Gail Snith Fair value Carrying amount 6 200 12 800 22 000 72 000 (18 600 Fair value Carrying amount Cash at bank Accounts receivable Inventory Equipment Accumulated depreciation S 6200 12 800 21 500 48 000 5 800 11 400 18 500 75 000 (26 500 S 5800 11 400 18 300 32 000 - equipment Accounts payable 13 400 13 400 12 800 12 800 Required Prepare separate journa recorded I entries to record the initial investment of each partner, assuming assets are by the business to reflect their purchase price, and the arrangement is GST-free

Explanation / Answer

JOURNAL ENTRIES TO RECORD THE INITIAL INVESTMENT OF EACH PARTNER

1 cash at bank $ 6,200

accounts receivable $ 12,800

inventory $ 21,500

equipment    $ 48,000

TO account payable $ 13,400

pike capital account ( balance fig ) $ 75,100

( to record initial investment of pike account )

2) cash at bank $ 5,800

account receivable $ 11,400

inventory $ 18,300

equipment $ 32,000

TO account payable $ 12,800

smith capital account ( balance fig) $ 54,700

( to record the initial investment of smith capital )

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