Nan Ferdinand has been operating an apartment-locator service as a proprietorship. She and Misti Morris have decided to form a partnership. Ferdinand’s investment consists of cash, $6,000; accounts receivable, $13,000; furniture, $15,000; a building, $51,000; and a note payable, $22,000.
To determine Ferdinand’s equity in the partnership, she and Morris hire an independent appraiser. The appraiser values all the assets and liabilities at their book value except the building, which has a current market value of $96,000. Also, there are additional accounts payable of $5,000 that Ferdinand will contribute. Morris will contribute cash equal to Ferdinand’s equity in the partnership.
Requirements
1. Journalize the entry on the partnership books to record Ferdinand’s investment.
2. Journalize the entry on the partnership books to record Morris’s investment.