Question

BE12-1 Barbara Ripley and Fred Nichols decide to organize the ALL-Star partnership. Ripley invests $15,000 cash, and Nichols contributes $10,000 cash and equipment having a book value of $3,500. Prepare the entry to record Nichols's investment in the partner- ship, assuming the equipment has a fair value of $4,000.

Answer 1

Dr Cash $10,000

Dr Equipment (at FairValue) $4,000

Cr Nichols’s Capital Account $14,000

Step-by-step explanation:

Preparation of the entry to record Nichols's investment in the partner- ship

Dr Cash $10,000

Dr Equipment (at FairValue) $4,000

Cr Nichols’s Capital Account $14,000

($10,000+$4,000)

(To record Nichols's investment in the partner- ship)