Reference no: EM132484024
On January 1, 2018, Ruben Ho and Clay Runnerup formed the Ruben and Clay Partnership by investing the following assets and liabilities in the business:
Ruben's Clay's
Book value Book value
Cash $12,000 $18,500
Equipment 38,000 53,500
Accumulated amort.-equipment 8,200 9,900
Buildings 84,000 95,000
Accumulated amort.-buildings 25,000 35,000
Land 60,000 66,000
Accounts payable 35,000 35,000
Note payable 17,000 29,000
Point : An independent appraiser believes that Ruben's equipment has a market value of $29,000 and Clay's equipment has a market value of $47,500. The appraiser indicates Ruben's building has a current value of $90,000 and Clay's building has a current value of $110,000. The appraiser further indicates that Ruben's land has a current value of $78,000 and Clay's land has a current value of $80,000. Ruben and Clay agree to share profits and losses in a 60:40 ratio. During the first year of operations, the business net income income of $74,000. Each partner withdrew $30,000 cash.
Question a) the journal entries to record the initial investments in the business by Ruben and Clay.
Question b) balance sheet dated January 1, 2018, after the completion of the initial journal entries.
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