Question

please help

Ken Lott and Jim Rosen operate separ decide to combine their separate bu form L & R Auto Repair, a partner presented below: operate separate auto repair shops. On January 1, 2007 they T separate businesses which were operated as proprietorships to epair, a partnership. Information from their separate balance sheets is Lott Auto Rosen Auto Cash Accounts Receivable Allowance for doubtful accounts Accounts Payable Notes Payable Salaries Payable Equipment Accumulated Depreciation Equipment $10,000 9,000 1,000 5,000 $12,000 7,000 500 6,000 3,000 1,500 24,000 4,000 1,000 12,000 2,000 It is agreed that the Fair Value of Lott's Accounts Receivable is $8,000, Allowance for doubtful accounts is $500 and Equipment $15,000. It is agreed that the Fair Value of Rosen's Accounts Receivable is $5,000, Allowance for doubtful accounts is $1,000 and Equipment $20,000. It is further agreed that the new partnership will assume all liabilities of the proprietorships with the exception of the Notes Payable on Rosen's balance sheet which he will pay himself. Instructions: epare the journal entries necessary to record the formation of the partnership.

Answer 1

As per the given information Ken Lott and Jim Rosen operate repair shops as soleproprietorship
They want to combine both the businesses forming the Partnership firm as L & R Auto Repair
In the partnership firm the assets and liabilities+ values of proprietorships taken as follows:
	Lott Auto	Rosen Auto	Total
	($)	($)
Assets:
Cash	10000	12000	22000
Accounts Receivable	8000	5000	13000
Allowances for doubtful accounts	500	1000	1500
Net accounts receivable	7500	4000	11500
Equipment	15000	20000	35000
Liabilities:
Accounts payable	5000	6000	11000
Notes Payable		0	0
Salaries Payable	1000	1500	2500
	26500	28500	55000
Journal entries in the books of L & R Auto repair are:
	Dr($)	Cr($)
Cash	22000
Accounts Receivable	13000
Equipments	35000
Allowances for doubtful accounts		1500
Account Payable		11000
Salaries Payable		2500
Ken Lott Capital account		26500
Jim Rosen Capital account		28500
	70000	70000