Assume that two individuals agree to form a partnership. Partner A is contributi
ID: 2580354 • 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.
Explanation / Answer
Cash 400000 Receivables 160000 Inventories 200000 Accounts payable 160000 Accrued liabilities 120000 Partner A Capital 240000 Partner B Capital 240000