Question

Holly Renfro contributed a patent, accounts receivable, and $20,000 cash to a partnership. The patent had a book value of $8,000. However, the technology covered by the patent appeared to have significant market potential. Thus, the patent was appraised at $92,000. The accounts receivable control account was $45,000, with an allowance for doubtful accounts of $3,000. The partnership also assumed a $14,000 account payable owed to a Renfro supplier.Provide the journal entry for Renfro’s contribution to the partnership.

Answer 1

Answer: Please see explanation column for answers

Step-by-step explanation:

Journal entry to record Renfro's contribution to partnership.

Account Titles and Explanation Debit Credit

Cash $ 20,000

Patent $92,000

Accounts receivables $45,000

Accounts payable $ 14,000

Allowance for doubtful accounts $ 3,000

Holly Renfro, capital $ 140,000

[20,000 + 92,000 + 45,000 - 14000 - 3,000} = $140,000