Question

In: Accounting

Carefully consider the post-closing trial balances of two proprietorships on January 1, 2017. &nbs

Carefully consider the post-closing trial balances of two proprietorships on January 1, 2017.

S Company L Company

$ $ $ $

Dr. Cr Dr Cr

Cash 14,000 12,000

Accounts Receivable 17,500 26,000

Allowances for doubtful debts 3,000 4,400

Inventory 26,500 18,400

Equipment 45,000 29,000

Accumulated Depreciation (Equipment) 24,000 11,000

Notes Payable 18,000 15,000

Accounts Payable 22,000 31,000

S Capital 36,000

L Capital 24,000

----------------- ----------- ----------- -----------

103,000 103,000 85400 85,400

----------------- ----------- ----------- -----------

S & L decide to form a partnership. Smart Partners, with the following agreed upon valuations for non-cash assets.

S Company L Company

Accounts Receivable $17,500 $26,000

Allowance for doubtful accounts 4,500 4,000

Inventory 28,000 20,000

Equipment 25,000 15,000

All cash will be transferred to the partnership and the partnership will assume all the liabilities of the two proprietorships. Further, it is agreed that S will invest an additional $5,000 in cash and L will invest an additional $19,000 in cash.

You are required to carry out the following tasks.

I Prepare separate journal entries to record the transfer of each proprietorship’s assets and liabilities to the partnership.

II Journalize the additional cash investments by each partner.

III Prepare a classified balance sheet for the partnership on January 1, 2017.

IV Discuss the differences between Sole-Proprietorship and Partnership

V Critically comment on the contributions of each partners to the new Partnership.

Expert Solution

1)

Particulars	Debit	Credit
Cash	14,000
Account Receivable	17,500
Merchandise Inventory	28,000
Equipment	23,000
Notes Payable		18,000
Accounts Payable		22,000
Allowance for Doubtful Account		4,500
S, Capital		38,000

Cash	12,000
Account Receivable	26,000
Merchandise Inventory	20,000
Equipment	16,000
Notes Payable		15,000
Accounts Payable		31,000
Allowance for Doubtful Account		4,000
L, Capital		24,000

2)

Particulars	Debit	Credit
Cash	5,000
S, Capital		5,000

Cash	19,000
L, Capital		19,000

3)

Balance Sheet
ASSETS
Current Assets
Cash ($14,000 + $12,000 + $5,000 + $19,000)		50,000
Accounts receivable ($17,500 + $26,000)	43,500
Less: Allowance for doubtful accounts ($4,500 + $4,000)	8,500	35,000
Merchandise inventory ($28,000 + $20,000)		48,000
Total current assets		133,000

Property, plant, and equipment
Equipment ($23,000 + $16,000)

Total assets

Liabilities and Owners’ Equity
Current liabilities
Notes payable ($18,000 + $15,000)		33,000
Accounts payable ($22,000 + $31,000)		53,000
Total current liabilities		86,000

Owners’ equity
S, Capital ($38,000 + $5,000)	43,000
L, , Capital ($24,000 + $19,000)	43,000
Total owners’ equity		86,000

Total liabilities and owners’ equity		172,000

4) A sole proprietorship is business owned by a single individual, a person who collects all the revenue from it, and maintains all liability for business debt. A partnership is business wherein two or more individuals are sharing the ownership, profit and liability for the debts of the company.

ekkarill92 answered 1 year ago

The post-closing trial balances of two proprietorships on January 1, 2017, are presented below. Sorensen Company...

The post-closing trial balances of two proprietorships on January 1, 2017, are presented below. Sorensen Company Lucas Company Dr. Cr. Dr. Cr. Cash $17,000 $14,400 Accounts receivable 21,000 31,000 Allowance for doubtful accounts $3,600 $5,300 Inventory 32,000 22,100 Equipment 54,000 35,000 Accumulated depreciation—equipment 28,800 13,200 Notes payable 21,600 18,000 Accounts payable 26,400 37,200 Sorensen, capital 43,600 Lucas, capital 28,800 $124,000 $124,000 $102,500 $102,500 Sorensen and Lucas decide to form a partnership, Solu Company, with the following agreed upon valuations for...

Post-Closing Trial Balance An accountant prepared the following post-closing trial balance: Security Services Co. Post-Closing Trial...

Post-Closing Trial Balance An accountant prepared the following post-closing trial balance: Security Services Co. Post-Closing Trial Balance July 31, 2018 Debit Balances Credit Balances Cash 41,100 Accounts Receivable 317,400 Supplies 5,000 Equipment 162,750 Accumulated Depreciation - Equipment 73,300 Accounts Payable 82,500 Salaries Payable 5,500 Unearned Rent 12,000 Common Stock 65,000 Retained Earnings 287,950 879,250 173,250 Prepare a corrected post-closing trial balance. Assume that all accounts have normal balances and that the amounts shown are correct. If an amount box does...

A post closing trial balance is a list of general ledger accounts and their balances after...

A post closing trial balance is a list of general ledger accounts and their balances after the closing entries have been posted. The post closing trial balance would contain only the balance sheet accounts with balances as the income statement accounts would not be listed because they are considered temporary accounts whose balances have been closed to the capital account. Please describe an income statement account that would be closed to the capital account.

Larkspur Corporation’s post-closing trial balance at December 31, 2017, is shown as follows. LARKSPUR CORPORATIONPOST-CLOSING TRIAL...

Larkspur Corporation’s post-closing trial balance at December 31, 2017, is shown as follows. LARKSPUR CORPORATIONPOST-CLOSING TRIAL BALANCEDECEMBER 31, 2017 Dr. Cr. Accounts payable $ 273,600 Accounts receivable $ 496,000 Accumulated depreciation—buildings 176,000 Additional paid-in capital in excess of par—common 1,428,000 From treasury stock 146,000 Allowance for doubtful accounts 32,000 Bonds payable 290,000...

Which of the following statements about the post-closing trial balance is correct? A) The post-closing trial...

Which of the following statements about the post-closing trial balance is correct? A) The post-closing trial balance is a report prepared before the adjustments and the financial statements to prove that debits equal credits. B) The post-closing trial balance will be distributed to investors and other stakeholders along with the financial statements. C) The post-closing trial balance is an internal report prepared at the end of the accounting cycle. D) The post-closing trial balance proves that all entries have been...

Post the journal entries to T accounts Prepare a post-closing trial balance Northeast Company January 1,...

Post the journal entries to T accounts Prepare a post-closing trial balance Northeast Company January 1, 2017, Balance Sheet Cash 20,000 Accounts receivable 110,000 Less: Allowance for doubtful accounts (2,000) Inventory (500 units @ $20 each) 10,000 Equipment 9,000 Less: Accumulated depreciation (2,000) ----------------- Total assets 145,000 Accounts payable 20,000 Long-term notes payable (5% interest, due in 2019) 100,000 Capital stock 10,000 Retained earnings 15,000 ------------------- 145,000 Transactions or events: The company collected 98,000 of the accounts receivable in cash....

Prepare a post closing trial balance

Prepare a post closing trial balance.

Prepare a post-closing trial balance.

Below is the closing entries for the year ended December 31, 2017 (b2) Prepare a post-closing trial balance. Crane Company Post-Closing Trial Balance Debit Credit Totals

The post-closing trial balance as of April 30, 20Y8, is shown below: Kelly Consulting Post-Closing Trial...

The post-closing trial balance as of April 30, 20Y8, is shown below: Kelly Consulting Post-Closing Trial Balance April 30, 20Y8 Account No. Debit Credit Cash 11 22,100 Accounts Receivable 12 3,400 Supplies 14 1,350 Prepaid Rent 15 3,200 Prepaid Insurance 16 1,500 Office Equipment 18 14,500 Accumulated Depreciation 19 330 Accounts Payable 21 800 Salaries Payable 22 120 Unearned Fees 23 2,500 Common Stock 31 30,000 Retained Earnings 32 12,300 46,050 46,050 Enter the unadjusted trial balance on an end-of-period...

Exercise 4-6 Preparing closing entries and the post-closing trial balance LO2,3,4 CHECK FIGURE: Post-closing trial balance...

Exercise 4-6 Preparing closing entries and the post-closing trial balance LO2,3,4 CHECK FIGURE: Post-closing trial balance columns = $51,300 The adjusted trial balance at April 30,2017 for Willard Co. follows Debit Credit 101 Cash 3,600 106 Account receivable 8,500 153 Trucks 26,000 154 Accumulated depreciation, trucks 8,250 193 Franchise 13,200 201 Accounts Payable 9,600 209 Salaries Payable 3,200 233 Unearned Revenue 1,300 301 Sid Willard, capital 29,100 302 Sid Willard, withdrawals. 9,600 401 Plumbing Revenue 42,050 611 Depreciation Expense, Trucks...