Question

Wendy Reichstein and Sonia Datta operate separate auto repair shops. On January 15, 2021, they decided to combine their businesses, which had been operated as proprietorships, to form Wendy & Sonia Auto Repair, a partnership. Information from their separate balance sheets is presented below:

		Wendy Auto Repair		Sonia Auto Repair
Cash		$8,100		$2,000
Accounts receivable		7,200		32,100
Allowance for doubtful accounts		800		1,500
Accounts payable		3,900		8,600
Notes payable		-		15,000
Salaries payable		-		1,100
Equipment		8,700		28,000
Accumulated depreciation - equipment		2,200		16,000

It is agreed that the expected realizable value of Wendy's accounts receivable is $4,700 and Sonia's receivables is $29,400. The fair market value of Wendy's equipment is $6,900 and Sonia's equipment is $9,100. It is further agreed that the new partnership will assume all liabilities of the proprietorships with the exception of the note payable on Sonia's balance sheet, which she will pay herself.

Prepare the journal entries necessary to record the formation of the partnership

Answer 1

Thank you

Amaver Particuloeu caedit Debit $810 Ca Sh AcCauntseceivable $7200 Equirmemt (Fanalue) $69a Allosam le ts Doubtlu Accaunts 800 Saloories & csages fayable ACCoumts Paya ble S 3900 wendy Reichstem Capital balamehgune) to ecod wendy Reichsten mvestment) Cash 2 2000 ACcaumts ecevable $32,100 Equipmemt (Fal lalue) Allasame busthul accounts $ 1500 Salor nes coages Pacyable 1100 Allaunts Payable $8609 Sonia Aut Capital (balome Aa) $32.000 To de SSnia Auto muetment)

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