Question

Brian McCarthy owns and operates a business called Brian's Music Shop. His postclosing trial balance on December 31, 2016, is provided below. Brian plans to enter into a partnership with Emma Jones, effective January 1, 2017. Profits and losses will be shared equally. Brian will transfer all assets and liabilities of his shop to the partnership, after revaluation. Emma will invest cash equal to Brian's investment after revaluation. The agreed values are: Accounts Receivable (net), $10,000; Merchandise Inventory, $35,000; and Store Equipment, $15,000.

The partnership will operate under the name Beautiful Music.

Record each partner's investment on page 1 of a general journal. Omit descriptions.

Prepare a balance sheet for Beautiful Music just after the investments.

Answer 1

Accounts Name	Debit in $	Credit in $
Account Receivable	10,000
Merchandise Inventory	35,000
Store Equipment	15000
Brian's Capital		60,000

When Brian's bring assets to business

Accounts Name	Debit in $	Credit in $
Cash	60,000
Emma's Capital		60,000

When Emma contribute cash euql to Brian's Capital

Balance Sheet:

Balance Sheet of Beautiful Music (After the Invenstment)
Liabilities	Amount in $		Assets	Amount in $
Brian's Capital	60,000		Accounts Receivable	10,000
Emma Capital	60,000		Merchandise Inventory	35,000
			Store Equipement	15,000
			Cash	60,000
	120,000			120,000