Reference no: EM132637102
Espanol operated a speciality shop that sold fishing equipment and accessories. Her post-closing trial balance on Decemebr 31, 2015 is as follows:
Fish
post-closing Trial Balance
December 31, 2015
debit credit
cash 36,000
accounts receivable 150,000
allowance for doubtful accounts 16,000
inventory 440,000
equipment 135,000
accumulated depreciation 75,000
accounts payable 30,000
Espanol, Capital 640,000
761,000 761,000
- Espanol plans to enter into contract of partnership with trusted associate, Quino, effective Jan. 1, 2016. Profits and losses will be shared equally. Espanol is to transfer all the assets and liabilities of her shop to the partnership after revaluation.
- Quino will invest cash equal to Espanol's investment after valuation. The agreed values are as follows- accounts receivables(net), 140,000; inventory, 460,000; and equipment (net), 124,000. The partnership will operate under the business name of R'Us.
Required:
Question 1: Prepare the opening Journal entries in the books of the partnership.
Question 2: Prepare the partnership's statement of financial position as at the date of formation of the partnership.