Mike Derr and Mark Finger form a partnership by combining assets of their separa

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.

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 $6,900, and land is worth $9,900.
Required
Prepare the partnership’s journal entry to record Derr’s investment.

Cash Supplies Equipment Less: Accumulated depreciation-Equip. Land Total assets $2,900 Accounts payable $ 6,400 5,000 11,400 4,900 Notes payable $20,500 16.600 Total liabilities 3,900 5, M. Derr, Capital 6,200 $ 17,660 Total liabilities and equity 17,660

Explanation / Answer

Solution :

Journal Entries Transaction Particulars Debit Credit 1 Cash Dr $2,900.00 Supplies Dr $4,900.00 Equipment Dr $6,900.00 Land Dr $9,900.00       To Accounts payable $6,400.00       To Notes payable $5,000.00       To M. Derr Capital $13,200.00 (To record Derr's investment in partnership)

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