Edward Vinzant operates a store that sells paintings and portraits by local artists. Vinzant has agreed to

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Edward Vinzant operates a store that sells paintings and portraits by local artists. Vinzant has agreed to enter into a partnership with Shirley Cosby, effective January 1, 2016. The new firm will be called The Artist's Supply. Vinzant is to transfer the assets and liabilities of his business to the partnership at the values agreed on. Cosby will invest cash that is equal to Vinzant's investment after revaluation. The accounts shown on Vinzant's books and the agreed-on value of assets and liabilities follow:
Edward Vinzant operates a store that sells paintings and portraits

Instructions
1. Prepare the general journal entries to record the following transactions on the books of the partnership on January 1, 2016:
a. Receipt of Vinzant's investment of assets and liabilities.
b. Receipt of Cosby's investment of cash.
2. Prepare a balance sheet for the partnership as of the beginning of its operations on January 1, 2016.
Analyze: If Shirley Cosby agreed to a cash investment equal to 80 percent of the value of Edward Vinzant's investment, what would the balance of Shirley Cosby's capital account be after the formation of the partnership?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...
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College Accounting Chapters 1-30

ISBN: 978-0077862398

14th edition

Authors: John Price, M. David Haddock, Michael Farina

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