Question

Kimberly Payne and Arionna Maples decide to form a partnership

An unincorporated business form consisting of two or more persons conducting business as co-owners for profit.

by combining the assets of their separate businesses. Payne contributes the following assets to the partnership: cash, $24,560; accounts receivable with a face amount of $161,390 and an allowance for doubtful accounts of $4,490; merchandise inventory with a cost of $84,060; and equipment with a cost of $137,580 and accumulated depreciation of $45,680.

The partners agree that $6,080 of the accounts receivable are completely worthless and are not to be accepted by the partnership, that $4,680 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 $99,950, and that the equipment is to be valued at $89,040.

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

Answer 1

Journal entry for recording Payne' sinvestment as capital

Cash Account Dr $24560

Accounts receivable Account Dr.                                $ 155,310

Merchandise Inventory Account Dr.                            $ 99,950

Equipment Account Dr.                                                $ 89040

         Kimberly payne, Capital Account                                                 $364,180

        Allowance for Doubtfult accounts                                                 $ 4680

Note: The assets are recorded at market value. howevver, Accounts receivable considered worthless is deducted from Gross value and an allowance is maintained as valued.