EX 12-1 Record partner’s original investment

Amber Moss and Latoya Pell decide to form a partnership by combining the assets of their separate businesses. Moss contributes the following assets to the partnership: cash, $15,000; accounts receivable with a face amount of $159,000 and an allowance for doubtful accounts of $9,700; merchandise inventory with a cost of $100,000; and equipment with a cost of $155,000 and accumulated depreciation of $100,000.

The partners agree that $6,000 of the accounts receivable are completely worthless and are not to be accepted by the partnership, that $11,400 is a reasonable allowance for the uncollectibility of the remaining accounts, that the merchandise inventory is to be recorded at the current market price of $91,450, and that the equipment is to be valued at $62,500.

Journalize the partnership’s entry to record Moss’s investment.

Answer:

Cash ..................................................................................... 15,000 Accounts Receivable.......................................................... 153,000 Merchandise Inventory....................................................... 91,450 Equipment............................................................................ 62,500  Allowance for Doubtful Accounts ................................  11,400  Amber Moss, Capital .....................................................  310,550

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