Ahmed, Faisal and Abdulrahman combined their proprietorships in October 2020 to start a partnership named AFA...

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Ahmed, Faisal and Abdulrahman combined their proprietorships in October 2020 to start a partnership named AFA Partnership. The firm will specialize in retailing medical equipment. The partners had the following assets prior to the formation of the partnership. Faisal Abdulrahman Ahmed 10,000 5,000 40,000 Cash Accounts Receivable Allowance for Doubtful (1,000) Accounts (AFDA) Equipment Accumulated Depreciation - Equipment 50,000 (15,000) The current market shows that the equipment has a fair value of $40,000 and after a discussion among the partners they agreed to have allowance for doubtful accounts of $500, and to share net income according to the following percentage 20%, 40% and 40%, respectively. Required: 1. Prepare the journal entries to record the investment of all partners. 2. Prepare the journal entries to record the division of the net income, assuming the net income was $90,000 and Faisal had drawings of $5,000. Ahmed, Faisal and Abdulrahman combined their proprietorships in October 2020 to start a partnership named AFA Partnership. The firm will specialize in retailing medical equipment. The partners had the following assets prior to the formation of the partnership. Faisal Abdulrahman Ahmed 10,000 5,000 40,000 Cash Accounts Receivable Allowance for Doubtful (1,000) Accounts (AFDA) Equipment Accumulated Depreciation - Equipment 50,000 (15,000) The current market shows that the equipment has a fair value of $40,000 and after a discussion among the partners they agreed to have allowance for doubtful accounts of $500, and to share net income according to the following percentage 20%, 40% and 40%, respectively. Required: 1. Prepare the journal entries to record the investment of all partners. 2. Prepare the journal entries to record the division of the net income, assuming the net income was $90,000 and Faisal had drawings of $5,000.

Answer rating: 100% (QA)

Solution Journal Entries in the books of AFA partnership Particulars Debit Credit Solution to 1 Cash ... View the full answer