Here are the post-closing trial balances of two proprietorships on January 1 of the current year:

Visanji and Vanbakel decide to form the Varsity partnership and agree on the following fair values for the noncash assets that each partner is contributing:
_________________________Visanji Vanbakel
Accounts receivable..............$11,500..................$15,500
Merchandise inventory............20,000...................15,000
Equipment...........................18,000...................14,000
All of the assets in the two proprietorships will be transferred to the partnership on January 1. The partnership will also assume all the liabilities of the two proprietorships. Further, it is agreed that Vanbakel will invest the amount of cash required so her investment in the partnership is equal to Visanji's.
Instructions
(a) Prepare separate journal entries to record the transfer of each proprietorship's assets and liabilities to the partnership on January 1.
(b) Journalize the additional cash investment.
(c) Prepare a balance sheet for the partnership at January 1.
Taking It Further
What are some of the advantages of two individuals such as Visanji and Vanbakel operating their businesses as a partnership instead of as two separate proprietorships?

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Vanbakel Com Dr. 5,000 Visanji Com Cr Cr $9,500 15,000 Cash Accounts receivable Allowance for doubtful acc Merchandise inventory Equipment Accumulated depreciation-equipment Accounts payable F Visanji, capital P. Vanbakel, capital 20,000 ounts $ 2,500 4,000 18,000 42,500 15,000 25,000 22,000 25,000 35,500 14,000 20,000 27,000 $65,000 $85,000 $85,000 $65,000