Reference no: EM132848489
Corporation: Formation and Share Capital Transactions Problem - The partnership of Daryl and Emily had the following statement of financial position accounts as of December 31, 2021:
Cash 240,000
Accounts receivable 200,000
Inventory 280,000
Equipment 160,000
Accumulated depreciation 16,000
Total assets 864,000
Accounts payable 344,000
Daryl, Capital 280,000
Emily, Capital 240,000
Total liabilities & partners equity 864,000
The partners agreed to incorporate the business, register the same as Cookie Bar Corporation and have the new corporation absorb all the assets and assume the liabilities of the partnership after giving effect to the following adjustments:
a. An allowance for uncollectible accounts of 20,000 will be provided.
b. The merchandise inventory will be adjusted to its fair value of 320,000.
c. The accumulated depreciation shall be increased by 6,000 to bring the carrying value of the equipment to its fair value.
Shares were issued, at par, equal in amount to the fair value of the net assets transferred to the corporation. Three other incorporators contributed total cash of 300,000 in exchange for the corporation's share capital. The shares were issued at par value.
Required -
(a) Prepare the entries in the books of the partnership of Daryl and Emily as a result of the foregoing.
(b) Prepare the entries in the books of the Cookie Bar Corporation.
(c) Prepare statement of financial position for Cookie Bar Corporation, immediately after its organization.