Assume that two individuals agree to form a partnership. Partner A is contributi
ID: 2568502 • 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:
Cash
.$120,000
Accounts payable.
$160,000
Receivables
160,000
Accrued liabilities
120,000
Inventories
200,000
Total liabilities
$280,000
Total assets
$480,000
Net assets
$200,000
Partner B is contributing cash of $280,000. 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
.$120,000
Accounts payable.
$160,000
Receivables
160,000
Accrued liabilities
120,000
Inventories
200,000
Total liabilities
$280,000
Total assets
$480,000
Net assets
$200,000
Explanation / Answer
Journal Entry Date Particulars Dr. Amt. Cr. Amt 1 Cash Dr. 400,000.00 Receivables Dr. 160,000.00 Inventories Dr. 200,000.00 To Accounts Payable 160,000.00 To Accrued Liabilities 120,000.00 To A Capital 240,000.00 To B Capital 240,000.00 (Record the Capital Contribution under Bonus Method)