Question

Jesse and Tim form a partnership by combining the assets of their separate businesses. Jesse contributes accounts receivable with a face amount of $45,000 and equipment with a cost of $182,000 and accumulated depreciation of $97,000. The partners agree that the equipment is to be valued at $68,400, that $3,700 of the accounts receivable are completely worthless and are not to be accepted by the partnership, and that $2,200 is a reasonable allowance for the uncollectibility of the remaining accounts receivable. Tim contributes cash of $21,500 and merchandise inventory of $45,500. The partners agree that the merchandise inventory is to be valued at $49,000.

Journalize the entries to record in the partnership accounts (a) Jesse's investment and (b) Tim's investment. If an amount box does not require an entry, leave it blank.

(a)
(b)

Answer 1

Answer
Journal
Date	Particulars	Dr. Amt	Cr. Amt.
a)	Accounts receivable (45000-3700)	$     41,300
	Equipment	$     68,400
	Allowance for doubtful accounts		$         2,200
	Capital, Jesse (41300+68400-2200)		$     107,500
	(To record the capital introduced by Jesse)
b)	Cash	$     21,500
	Merchandise inventory	$     49,000
	Capital, Tim		$       70,500
	(To record the capital introduced by Tim)
(ii) Inventory brought in by Tim will be recorded at its fair market value of $49,000