El-Hashem Partners is a partnership started by two brothers, Muhab and Ghassan El-Hashem. Each has an equal share of the total owners’ equity of $90,000. There is only one asset, a rental house listed at $350,000, and one liability, a mortgage loan of $260,000. The date is June 15, 20X0. The El-Hashem brothers are considering changing their partnership to El-Hashem Corporation by issuing each brother 1,000 shares of common stock.
1. Prepare a balance sheet for the current partnership.
2. Prepare a balance sheet if the brothers form a corporation. The par value of each share of common stock is $1.