Question

Austin Fisher contributed land, inventory, and $32,000 cash to a partnership. The land had a book value of $59,000 and a market value of $103,000. The inventory had a book value of $70,900 and a market value of $65,900. The partnership also assumed a $42,000 note payable owed by Fisher that was used originally to purchase the land. Required: Provide the journal entry for Fisher's contribution to the partnership. If an amount box does not require an entry, leave it blank.

Answer 1

Journal entry for Fisher's contribution to the partnership

Description

Cash $32,000 (Debit)

Land $103,000 (Debit)

Inventory $65,900 (Debit)

Payable on Note $42,000 (Credit)

Capital $158,900 (Credit)

NB: Capital= ($32,000 + $103,000 + $65,900 - $42,000) = $158,900