Kimbenhy Payne and Aicana Maples decide to form a paresship by combining the ass

Question

Kimbenhy Payne and Aicana Maples decide to form a paresship by combining the assets of their separale busnesses Payne contributes the tollswing assets to the parnership cash, $20,000, accounts receivable with a face amount of $145,000 and an allow ance for doubthul accounts of $4,200, merchancdise inventory with a cost of $92,00, and equipment with a cost of $136.000 and accumulated depreciation of 545,000 The partners agree that $5,000 of the accounts receivable are completely worthless and are not to be accepted by the partnership, at $4 400 s a reasonable allowance for the uncofectbity of the remaining accounts, that the merchandse i nvenory is to be recorded at the current market price of $101,700, and that the equpment is to be valued at $81 200

Explanation / Answer

JOURNAL ENTRY: Cash Account Dr. 20000 Accounts Receivable Dr. 140000 Merchandise Inventory Dr. 101700 Equipment Account Dr. 81200      Allowance for uncollectible account 4400      Payne Capital Account 338500

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