Wendy Reichstein and Sonia Datta operate separate auto repair shops. On January 15, 2021, they...
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Accounting
Wendy Reichstein and Sonia Datta operate separate auto repair shops. On January 15, 2021, they decided to combine their businesses, which had been operated as proprietorships, to form Wendy & Sonia Auto Repair, a partnership. Information from their separate balance sheets is presented below:
Wendy Auto Repair
Sonia Auto Repair
Cash
$8,100
$2,000
Accounts receivable
7,200
32,100
Allowance for doubtful accounts
800
1,500
Accounts payable
3,900
8,600
Notes payable
-
15,000
Salaries payable
-
1,100
Equipment
8,700
28,000
Accumulated depreciation - equipment
2,200
16,000
It is agreed that the expected realizable value of Wendy's accounts receivable is $4,700 and Sonia's receivables is $29,400. The fair market value of Wendy's equipment is $6,900 and Sonia's equipment is $9,100. It is further agreed that the new partnership will assume all liabilities of the proprietorships with the exception of the note payable on Sonia's balance sheet, which she will pay herself. Prepare the journal entries necessary to record the formation of the partnership
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