Question

Kimberly Payne and Arionna Maples decide to form a partnership by combining the assets of their separate businesses. Payne contributes the following assets to the partnership: cash, $22,990; accounts receivable with a face amount of $159,400 and an allowance for doubtful accounts of $3,950; merchandise inventory with a cost of $83,280; and equipment with a cost of $123,390 and accumulated depreciation of $41,930. The partners agree that $5,790 of the accounts receivable are completely worthless and are not to be accepted by the partnership, that $5,120 is a reasonable allowance for the uncollectibility of the remaining accounts, that the merchandise inventory is to be recorded at the current market price of $97,030, and that the equipment is to be valued at $81,690. On December 1, journalize the partnership’s entry to record Payne’s investment.

Refer to the Chart of Accounts for exact wording of account titles.

CHART OF ACCOUNTS Payne and Arionna Maples General Ledger ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable 113 Allowance for Doubtful Accounts 114 Interest Receivable 115 Notes Receivable 116 Merchandise Inventory 117 Office Supplies 118 Store Supplies 119 Prepaid Insurance 120 Land 123 Equipment 124 Accumulated Depreciation-Equipment 129 Asset Revaluations 133 Patent LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable EQUITY 310 Kimberly Payne, Capital 311 Kimberly Payne, Drawing 312 Arionna Maples, Capital 313 Arionna Maples, Drawing REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Merchandise Sold 520 Salaries Expense 521 Advertising Expense 522 Depreciation Expense-Equipment 523 Delivery Expense 524 Repairs Expense 529 Selling Expenses 531 Rent Expense 533 Insurance Expense 534 Office Supplies Expense 535 Store Supplies Expense 536 Credit Card Expense 537 Cash Short and Over 538 Bad Debt Expense 539 Miscellaneous Expense 710 Interest Expense

On December 1, journalize the partnership’s entry to record Payne’s investment. Refer to the Chart of Accounts for exact wording of account titles. PAGE 1 JOURNALACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY

Answer 1

Answer

	Journal Entry
	Date	Particulars	Debit	Credit	Head
	Dec-01	110 Cash	$              22,990		Asset
		112 Accounts Receivable	$      153,610		Asset
		116 Merchandise Inventory	$        97,030		Asset
		123 Equipment	$        81,690		Asset
		113 Allowance for Doubtful Accounts		$            5,120	Asset
		310 Kimberly Payne, Capital		$        350,200	Equity

				Accounting Equation
	Assets	=	Liability	+	Equity
	110 Cash	112 Accounts Receivable	116 Merchandise Inventory	123 Equipment	113 Allowance for Doubtful Accounts	=	0	+	310 Kimberly Payne, Capital
	$ 22,990	$                      153,610	$                            97,030	$        81,690	$                                               (5,120)	=	0	+	350200