Tammie Pike and Gail Smith agree to combine their businesses and form a partnership. The fair value
Question:
Tammie Pike and Gail Smith agree to combine their businesses and form a partnership. The fair value and the carrying amount of the assets contributed by each partner and the liabilities assumed by the partnership are shown below:
Tammie Pike | Gail Smith | ||||||||||||
Carrying amount | Fair value | Carrying amount | Fair value | ||||||||||
Cash at bank Accounts receivable Inventory Equipment Accumulated depreciation – equipment Accounts payable | $ | 6 200 12 800 22 000 72 000 (18 600 13 400 | ) | $ | 6 200 12 800 21 500 48 000 — 13 400 | $ | 5 800 11 400 18 500 75 000 (26 500 12 800 | ) | $ | 5 800 11 400 18 300 32 000 — 12 800 | |||
Required
Prepare separate journal entries to record the initial investment of each partner, assuming assets are recorded by the business to reflect their purchase price, and the arrangement is GST-free.
PartnershipA 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...
Step by Step Answer:
Accounting
ISBN: 978-1118608227
9th edition
Authors: Lew Edwards, John Medlin, Keryn Chalmers, Andreas Hellmann, Claire Beattie, Jodie Maxfield, John Hoggett