Question

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

Sorensen Company

Lucas Company

Dr.

Cr.

Dr.

Cr.

$11,000

$9,100

13,500

20,000

$2,300

$3,300

20,000

14,000

34,000

22,000

18,200

8,400

13,700

11,400

16,700

23,600

27,600

18,400

$78,500

$78,500

$65,100

$65,100

Sorensen and Lucas decide to form a partnership, Solu Company, with the following agreed upon valuations for noncash assets.

Sorensen Company

Lucas Company

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 Sorensen will invest an additional $3,800 in cash, and Lucas will invest an additional $14,400 in cash.

1. )

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

2. Journalize the additional cash investment by each partner.

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

 

 

Sorensen Company

 

Lucas Company

 

 

Dr.

 

Cr.

 

Dr.

 

Cr.

Cash

 

$11,000

 

 

 

$9,100

 

 

Accounts receivable

 

13,500

 

 

 

20,000

 

 

Allowance for doubtful accounts

 

 

 

$2,300

 

 

 

$3,300

Inventory

 

20,000

 

 

 

14,000

 

 

Equipment

 

34,000

 

 

 

22,000

 

 

Accumulated depreciation—equipment

 

 

 

18,200

 

 

 

8,400

Notes payable

 

 

 

13,700

 

 

 

11,400

Accounts payable

 

 

 

16,700

 

 

 

23,600

Sorensen, capital

 

 

 

27,600

 

 

 

 

Lucas, capital

 

 

 

 

 

 

 

18,400

 

 

$78,500

 

$78,500

 

$65,100

 

$65,100