Assume that two individuals agree to form a partnership. Partner A is contributi
ID: 2447214 • Letter: A
Question
Assume that two individuals agree to form a partnership. Partner A is contributing an operating business that reports the following balance sheet:
.$ 60,000
Accounts payable.
$ 80,000
Accrued liabilities
Total liabilities
$140,000
Total assets
$240,000
Net assets
Partner B is contributing cash of $140,000. The partners agree that the initial capital of the partnership should be shared equally.
Required: Prepare the journal entry to record the capital contributions of the partners assuming that the partners wish to employ the Bonus Method.
Cash.$ 60,000
Accounts payable.
$ 80,000
Receivables 80,000Accrued liabilities
60,000 Inventories 100,000Total liabilities
$140,000
Total assets
$240,000
Net assets
$100,000Explanation / Answer
Answer:
Patrner's B share shall be treated as 120,000 and Bonus 20,000 (140,000-120,000) shall be credited in Partner's A capital.
Journal Entries Date Accounts Debit $ Credit $ Cash 60,000.00 Receivable 80,000.00 Inventories 100,000.00 Accounts payable 80,000.00 Accrued Liabilites 60,000.00 Cash 140,000.00 Partner'A Capital account 100,000.00 Partner'B Capital account 120,000.00 Partner'A Capital account 20,000.00