Question

PRINTER VERSION RACK NEX Exercise 12-3 Suzy Vopat has owned and operated a proprietorship for several years. On January 1, she decides to terminate this business and become a partner in the firm of Vopat and Sigma. Vopa investment in the partnership consists of $11,000 in cash, and the following assets of the proprietorship: accounts receivable $14,000 less allowance for doubtful accounts of $1,500, ane equipment $9,000 less accumulated depreciation of $3,500. It is agreed that the allowance for doubtful accounts should be $2,250 for the partnership. The fair value of the equipment $12,500. Journalize Vopat's admission to the firm of Vopat and Sigma. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Credit Jan. Debit Click if you would like to Show Work for this question: Oren Show Work Question Attempts: 0 of 3 used SAVE FOR LATER SUBMIT ANSWER

Answer 1

Journal Entries in the books of Vopat and Sigma
Date	Account Title and explanation	Debit	Credit
Jan 1	Cash	11000
	Accounts Receivables	14000
	Equipment	12500
	Allowance for Doubtful Debts		2250
	Vopat's Capital		35250
	(To record admission of Vopat and capital contribution)

Note: It is to be noted that while doing the merger of proprietorships into a partnership firm, all assets & liabilities of proprietorship firm are transferred at the fair market value as on the date of the merger, since it is a new partnership entity which is being formed to start a business activity under a partnership arrangement.