Question

Jesse and Tim form a partnership by combining the assets of their separate businesses. Jesse contributes accounts receivable with a face amount of $46,000 and equipment with a cost of $185,000 and accumulated depreciation of $105,000. The partners agree that the equipment is to be valued at $67,800, that $3,300 of the accounts receivable are completely worthless and are not to be accepted by the partnership, and that $1,900 is a reasonable allowance for the uncollectibility of the remaining accounts receivable. Tim contributes cash of $20,000 and merchandise inventory of $45,000. The partners agree that the merchandise inventory is to be valued at $48,500. 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.

Answer 1

(a) Jesse's investment is 108400 (b) Tim's investment is 68500

Step-by-step explanation:

Solution

We Journalize the entries for both Jesse and Tim in the books of Partnership accounts

(a)Jesse's Investment

Account Name Debit($) Credit($)

Accounts Receivable

(46000-3500) 42500

Equipment(Agreed Price) 67800

Allowance for Doubtful Debts 1900

Jesse,Capital A/c 108400

(b) Tim's Investment

Cash 20000

Inventory(At Agreed price) 48500

Tim Capital 68500