Question

Partnership - Formation & Organization In the 1st of January 2020, A, B and C conducted an agreement to form a partnership titled ABC Trading & Shipping. Ltd. Total capital of the company is $ 300,000 divided equally. Each partner offers his share as follows: • Partner (A): paid all his contribution in cash. • Partner (B): offers his contribution in kind as follows: Land $ 50,000 Furniture 20,000 and inventory 40,000 Partner (C): gives up his proprietorship for the new partnership. The last balance sheet of the proprietorship was as follows:

Answer 1

(i)

                                                                                                                Credit                    Debit

Land A/c                              Dr                                                                                           50000

Furniture A/c                     Dr                                                                                           20000

Inventory A/c                    Dr                                                                                           40000

To B’s Capital                                                                                     110000

B’s Current A/c                                 DR                                                                                          10000

To Inventory                                                                                     10000

Cash A/c                              Dr                                                                                           10000

A/C Receivable                                 Dr                                                                                           20000

Inventory A/c                    Dr                                                                                           30000

Land A/c                              Dr                                                                                           24000

Mechinary A/c                  Dr                                                                                           36000

Furniture A/c                     Dr                                                                                           10000

To A/c Payable                                                                                  26000

To short term loan                                                                           14000

To C’s Capital                                                                                     90000

C’s Current A/c                                 Dr                                                                                           30000

To inventory A/c                                                                              30000

Balance sheet ABC Trading & shipping LTD

Liability	Amount	Asset	Amount
A’s Capital B’s Capital C’s Capital A/c Payable Short Term loan	100000 100000 100000 26000 14000	Cash Land Furniture inventory A/c Receivable Mechinary B’s Current A/C C’sCurrent A/c	110000 74000 30000 30000 20000 36000 10000 30000
340000	340000

(ii)

                                                                                                                Credit                    Debit

Land A/c                              Dr                                                                                           50000

Furniture A/c                     Dr 20000

Inventory A/c                    Dr 40000

To B’s Capital                                                                                  100000

To B’s Capital Reserve                                                                    10000

Cash A/c                              Dr                                                                                           10000

A/C Receivable                    Dr                                                                                           20000

Inventory A/c Dr                                                                                           30000

Land A/c                              Dr                                                                                           24000

Mechinary A/c                  Dr                                                                                           36000

Furniture A/c                     Dr                                                                                           10000

To A/c Payable                                                                                  26000

To short term loan 14000

To C’s Capital                                                                                    90000

To C’s Capital Reserve                                                                    30000

Balance sheet ABC Trading & shipping LTD

Liability	Amount	Asset	Amount
A’s Capital B’s Capital C’s Capital A/c Payable Short Term loan B’s Capital Reserve C’s Capital Reserve	100000 100000 100000 26000 14000 10000 30000	Cash Land Furniture inventory A/c Receivable Mechinary	150000 74000 30000 70000 20000 36000
380000	380000