90.2K

Verified Solution

Link Copied!

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

	Pica Company		Knows Company
	Debit	Credit	Debit	Credit
Cash	9,500		6,000
Accounts receivable	15,000		23,000
Allowance for Doubtful Accts.		2,500		4,000
Inventory	28,000		17,000
Equipment	50,000		30,000
Acc. Depreciation Equipment		24,000		13,000
Notes payable		25,000
Accounts payable		20,000		37,000
Pica, capital		31,000
Knows, capital				22,000
	102,500	102,500	76,000	76,000

Pica and Knows decide to form a partnership, Pica-Knows Company, with the following agreed upon valuations for noncash assets.

	Pica Company	Knows Company
Accounts receivable	$15,000	$23,000
Allowance for doubtful accounts	3,500	5,000
Inventory	32,000	21,000
Equipment	28,000	18,000

All cash will be transferred to the partnership, and the partnership will assume all the liabilities of the two proprietorships. Prepare separate journal entries to record the transfer of each proprietorships assets and liabilities to the partnership.

Answer & Explanation Solved by verified expert

See Answer