When Alice and Betty decided to incorporate their partnership, its trial balance was as follows:

The partnership€™s books will be closed, and new books will be used for A & B Corporation. The following additional information is available:
1. The estimated fair values of the assets follow:
Accounts Receivable .... $21,600
Inventory ......... 32,800
Equipment .......... 40,000
2. All assets and liabilities are transferred to the corporation.
3. The common stock is $10 par. Alice and Betty receive a total of 7,100 shares.
4. The partners€™ profit and loss€“sharing ratio is shown in the trial balance.

Required
a. Prepare the entries on the partnership€™s books to record (1) the revaluation of assets, (2) the transfer of the assets to A & B Corporation and the receipt of the common stock, and (3) the closing of the books.
b. Prepare the entries on A & B Corporation€™s books to record the assets and the issuance of the commonstock.

Transcribed Image Text:

Debit Credit Cash Accounts Receivable (net) Inventory Equipment (net) Accounts Payable Alice, Capital (60%) Betty, Capital (40%) Tota $ 8,000 22,400 36,000 47,200 17,200 62,400 34,000 $113,600 $113,600