Problem 12-1A The post-closing trial balances of two proprietorships on January
ID: 2399261 • Letter: P
Question
Problem 12-1A The post-closing trial balances of two proprietorships on January 1, 2017, are presented below. Sorensen Company Lucas Company Dr. Cr. Cr. Dr. $9,400 20,000 Cash Accounts receivable Allowance for doubtful accounts Inventory Equipment Accumulated depreciation-equipment Notes payable Accounts payable Sorensen, capital Lucas, capital $11,000 13,500 $2,300 $3,400 20,500 35,000 14,400 23,000 18,700 14,000 17,200 27,800 8,600 11,700 24,200 18,900 $80,000 $80,000 $66,800 $66,800 Sorensen and Lucas decide to form a partnership, Solu Company, with the following agreed upon valuations for noncash assets Sorensen Company Lucas Company $13,500 3,500 21,800 19,500 $20,000 3,100 15,600 11,700 Accounts receivable Allowance for doubtful accounts Inventory Equipment All cash will be transferred to the partnership, and the partnership will assume all the liabilities of the two proprietorships. Further, it is agreed that Sorensen will invest an additional $3,900 in cash, and Lucas will invest an additional $14,800 in cash.Explanation / Answer
Date
Debit
Credit
1 Jan
Cash
11000
A/c Receivable
13500
Inventory
21800
Equipment
19500
Notes Payable
14000
A/c Payable
17200
Allowance for Doubtful accounts
3500
Sorensen Capital
31100
(Transfer of Sorensen Asset & Liabilities)
1 Jan
Cash
9400
A/c Receivable
20000
Inventory
15600
Equipment
11700
Notes Payable
11700
A/c Payable
24200
Allowance for Doubtful accounts
3100
Lucas, Capital
17700
(Transfer of Sorensen Asset & Liabilities)
Solu Company Balance sheet as on 1 January, 2017:-
Current Assets:-
Cash
39100
A/c receivable (13500 + 20000)
33500
Less:-Allowance for doubtful debt
6600
26900
Inventory (21800 + 15600)
37400
Total Current Assets
103400
Non Current Assets:-
31200
Equipment
134600
Total Assets
Current Liabilities:-
Notes Payable
25700
A/c Payable
41400
Total Current Liabilities
67100
Owners Equity:-
Sorensen Capital (31100 + 3900)
35000
Lucas, Capital (17700 + 14800)
32500
67500
Total Liabilities & Owners Equity
134600
Date
Debit
Credit
1 Jan
Cash
11000
A/c Receivable
13500
Inventory
21800
Equipment
19500
Notes Payable
14000
A/c Payable
17200
Allowance for Doubtful accounts
3500
Sorensen Capital
31100
(Transfer of Sorensen Asset & Liabilities)
1 Jan
Cash
9400
A/c Receivable
20000
Inventory
15600
Equipment
11700
Notes Payable
11700
A/c Payable
24200
Allowance for Doubtful accounts
3100
Lucas, Capital
17700
(Transfer of Sorensen Asset & Liabilities)