Reference no: EM133062714

Question - Ellice, Gabriel and Marissa are sole proprietors who decided to merge their businesses to form a partnership in the name of ELGAMA. Their respective books of accounts show the following unadjusted trial balances before partnership formation:

	Ellice	Gabriel	Marissa
Cash	20,000	100,000	80,000
Accounts Receivable	150,000	70,000	120,000
Merchandise Inventory	200,000	50,000	160,000
Furniture & fixtures	30,000	90,000	20,000
Store Equipment	60,000	40,000	0
Prepaid Expenses	0	0	10,000
Accounts Payable	100,000	160,000	40,000
Notes Payable	0	0	150,000
Capital	?	?	?

The following adjustments were agreed upon by the partners:

a. Prepaid expenses and liabilities will not be assumed by the partnership.

b. Merchandise inventory will be valued at 90%.

c. Accounts Receivable are ascertained to be 5% uncollectible.

d. Fixed assets are to be valued at 75%.

e. Partners' capital would be equivalent to the net assets contributed.

Required -

3a. Journal entries to record the investments of the partners.

3b. Statement of Financial Position upon partnership formation.