Joe Mann and Sam Trane operate separate auto repair shops. On January 1, 2010, they decide to combine their separate businesses which were operated as proprietorships to form M & S Auto Repair, a partnership. Information from their separate balance sheets is presented below:
It is agreed that the expected realizable value of Mann's accounts receivable is $8,000 and Trane's receivables is $7,000. The fair market value of Mann's equipment is $13,000 and the value of Trane's equipment is $20,000. It is further agreed that the new partnership will assume all liabilities of the proprietorships with the exception of the notes payable on Trane's balance sheet which he will pay himself.
Instructions
Prepare the journal entries necessary to record the formation of the partnership.

Question

Joe Mann and Sam Trane operate separate auto repair shops. On January 1, 2010, they decide to combine their separate businesses which were operated as proprietorships to form M & S Auto Repair, a partnership. Information from their separate balance sheets is presented below:  
It is agreed that the expected realizable value of Mann's accounts receivable is $8,000 and Trane's receivables is $7,000. The fair market value of Mann's equipment is $13,000 and the value of Trane's equipment is $20,000. It is further agreed that the new partnership will assume all liabilities of the proprietorships with the exception of the notes payable on Trane's balance sheet which he will pay himself.
Instructions
Prepare the journal entries necessary to record the formation of the partnership.

Quizplus · Accepted Answer

The Answer of Joe Mann and Sam Trane operate separate auto repair shops. On January 1, 2010, they decide to combine their separate businesses which were operated as proprietorships to form M & S Auto Repair, a partnership. Information from their separate balance sheets is presented below:  
It is agreed that the expected realizable value of Mann's accounts receivable is $8,000 and Trane's receivables is $7,000. The fair market value of Mann's equipment is $13,000 and the value of Trane's equipment is $20,000. It is further agreed that the new partnership will assume all liabilities of the proprietorships with the exception of the notes payable on Trane's balance sheet which he will pay himself.
Instructions
Prepare the journal entries necessary to record the formation of the partnership.

Joe Mann and Sam Trane Operate Separate Auto Repair Shops