Question

Eustace scrubb and will poulter decide the all star partinership scrubb invests $15000cash and pouter contributes $10000cash and equiment having abook value of $3500 prepare the entry record poulter investmen in the partinership assuming the equipment has afair value of $5000.

Answer 1

To record Will Poulter's investment in the partnership, we need to consider the fair value of the equipment contributed. The fair value of the equipment is $5000, which is higher than its book value of $3500. Therefore, we need to record a journal entry to reflect the increase in the value of the equipment.

Step-by-step explanation:

To record Will Poulter's investment in the partnership, we need to consider the fair value of the equipment contributed. The fair value of the equipment is $5000, which is higher than its book value of $3500. Therefore, we need to record a journal entry to reflect the increase in the value of the equipment.

1. Debit: Will Poulter, Capital ($15000)
2. Debit: Equipment (increase in value - $5000 - $3500 = $1500)
3. Credit: Eustace Scrubb, Capital ($15000)
4. Credit: Cash (Will Poulter's cash contribution - $10000)