Arnold Black and Sam Smith operate separate auto repair shops as proprietorships. On January 1, 2024, they decide to combine their separate businesses to form Black Smith Auto Repair, a partnership. Information from their separate balance sheets is presented below:

Black Auto Repair Smith Auto Repair

Cash............................................................................. $5,000 $10,000

Accounts receivable.................................................. 8,000 5,000

Allowance for doubtful accounts............................ 1,000 500

Accounts payable...................................................... 3,000 6,000

Notes payable............................................................. 5,000

Salaries payable......................................................... 1,000 500

Equipment................................................................... 12,000 26,000

Accumulated depreciationequipment................ 2,000 4,000

It is agreed that the expected realizable value of Black's accounts receivable is $5,000 and Smith's receivables is $4,000. The fair value of Black's equipment is $15,000 and Smith's equipment is $24,000. It is further agreed that the new partnership will assume all liabilities of the proprietorships with the exception of the notes payable on Smith's balance sheet that he will pay himself.

Required:

Prepare the journal entries necessary to record the formation of the partnership.