Formation of partnership Assume that two individuals agree to form a partnership. Partner A is contributing an operating business that reports the following balance sheet: Cash $5.000 Accounts payable $15.000 Receivables 10.000 Accrued laboties 10,000 Inventories 20.000 Tocal liabilities $25,000 Total assets $35.000 Net assets $10.000 Partner B is contributing cash of $25,000. The partners agree that the initial capital of the partnership should be shared equally. Prepare the journal entry to record the capital contributions of the partners using both the Bonus Method and the Goodwill Method Debit Credit Description Bonus Method Cash Receivables Accounts payable Accrued liabilities Partner 8 Capital Goodwil Method Cash Receivables Inventories Accounts payable Accrued tables Partner A Capital 0 D . 0 0 0 0 0 0 0 0 0 0 0 0 O O 0 0 0 0 0 0 0 0 a 0 0 0 0 D 0 O
Formation of partnership Assume that two individuals agree to form a partnership. Partner A is contributing an operating business that reports the following balance sheet: Cash $5.000 Accounts payable $15.000 Receivables 10.000 Accrued laboties 10,000 Inventories 20.000 Tocal liabilities $25,000 Total assets $35.000 Net assets $10.000 Partner B is contributing cash of $25,000. The partners agree that the initial capital of the partnership should be shared equally. Prepare the journal entry to record the capital contributions of the partners using both the Bonus Method and the Goodwill Method Debit Credit Description Bonus Method Cash Receivables Accounts payable Accrued liabilities Partner 8 Capital Goodwil Method Cash Receivables Inventories Accounts payable Accrued tables Partner A Capital 0 D . 0 0 0 0 0 0 0 0 0 0 0 0 O O 0 0 0 0 0 0 0 0 a 0 0 0 0 D 0 O
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter11: Stockholders' Equity
Section: Chapter Questions
Problem 11.9AP
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Transcribed Image Text:Formation of partnership
Assume that two individuals agree to form a partnership. Partner A is contributing an operating business that reports the following balance sheet:
Cash
$5.000 Accounts payable $15.000
Receivables 10.000 Accrued liabilities 10,000
Inventories 20.000 Tocal liabilities
$25,000
Total assets $35.000 Net assets
$10,000
Partner B is contributing cash of $25,000. The partners agree that the initial capital of the partnership should be shared equally. Prepare the journal entry to record the capital contributions of the partners using
both the Bonus Method and the Goodwill Method
Debit
Description
Bonus Method
Cash
Receivables
Accounts payable
Accrued abilities
Partner 8 Capital
Goodwill Method
Cash
Receivables
Inventories
Accounts payable
Accrued tables
Partner A Capital
Check
•
#
=
#
0
。
0
O
0
0
10
0
0
0
D
O
D
0
0
Credit
0
0
0
0
0
0
O
0
O
0
0
0
D
0
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