Jim Steele and John Rich operate separate auto repair shops as proprietorships. On January 1, 2014, they decide to combine their separate businesses to form Steele Rich Auto Repair, a partnership. Information from their separate balance sheets is presented below: It is agreed that the expected realizable value of Steele's accounts receivable is $5,000 and Rich's receivables is $4,000. The fair value of Steele's equipment is $15,000 and Rich's equipment is $24,000. It is further agreed that the new partnership will assume all liabilities of the proprietorships with the exception of the notes payable on Rich's balance sheet which he will pay himself.
Instructions
Prepare the journal entries necessary to record the formation of the partnership.

Question

Jim Steele and John Rich operate separate auto repair shops as proprietorships. On January 1, 2014, they decide to combine their separate businesses to form Steele Rich Auto Repair, a partnership. Information from their separate balance sheets is presented below:  It is agreed that the expected realizable value of Steele's accounts receivable is $5,000 and Rich's receivables is $4,000. The fair value of Steele's equipment is $15,000 and Rich's equipment is $24,000. It is further agreed that the new partnership will assume all liabilities of the proprietorships with the exception of the notes payable on Rich'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 Jim Steele and John Rich operate separate auto repair shops as proprietorships. On January 1, 2014, they decide to combine their separate businesses to form Steele Rich Auto Repair, a partnership. Information from their separate balance sheets is presented below:  It is agreed that the expected realizable value of Steele's accounts receivable is $5,000 and Rich's receivables is $4,000. The fair value of Steele's equipment is $15,000 and Rich's equipment is $24,000. It is further agreed that the new partnership will assume all liabilities of the proprietorships with the exception of the notes payable on Rich's balance sheet which he will pay himself.
Instructions
Prepare the journal entries necessary to record the formation of the partnership.

Jim Steele and John Rich Operate Separate Auto Repair Shops