Question

Mike Derr and Mark Finger form a partnership by combining assets of their separate businesses. The following balance sheet information is provided by Derr from his sole proprietorship.Cash $1,800 Accounts payable $5,300 Supplies 3,800 Notes payable 3,900 Equipment $15,000 Total liabilities 9,200 Less: Accumulated depreciation—Equip. 12,200 2,800 Land 4,800 M. Derr, Capital 4,000 Total assets $ 13,200 Total liabilities and equitY$ 13,200 The new partners obtain appraised values and agree to accept the book values for Derr’s assets and liabilities except for the following: Equipment is valued at $5,800, and land is worth $8,800.RequiredPrepare the partnership’s journal entry to record Derr’s investment.Journal entry worksheetRecord investment of Derr.Note: Enter debits before credits.

Answer 1

Answer and Explanation:

The journal entry to record the Derr investment is shown below:

Cash Dr $1,800

Supplies Dr $3,800

Equipment Dr $5,800

Land Dr $8,800

To Account payable $5,300

To Notes payable $3,900

To Mr Derr capital $11,000

(Being the investment is recorded)

Here all assets are debited as it increased the assets and credited all liabilities as it also increased the liabilities