Omar Mndez and Rafael Cuadrado decide to form a partnership that began operations on January 2, 2025.
Question:
Omar Méndez and Rafael Cuadrado decide to form a partnership that began operations on January 2, 2025. Méndez invests $ 8,800 in cash and Account Receivable for a value of $ 22,000 less Allowance for Doubtfull Accounts of $ 2,200. Cuadrado contributes $ 16,500 in cash and equipment with a book value of $ 6,600 and a fair market value of $ 11,000. Both agreed to contribute 50% of the capital of the company.
The Partnership Agreement specifies that Méndez will have a salary of $ 20,000 and Square of $ 25,000. Each partner will also have an interest income equal to 10% of their initial capital balance and the remaining income will be divided equally.
As of December 31, 2025, there were the following balances on the General Ledger:
Service Revenue $ 135,200
Total Expenses 43,200.
O Mendez-drawings 5,500
R Square-drawings 3,300
O Méndez-additional investment 15,000
R Square-additional investment 6,000
Total Liabilities 25,000
Prepare
Jornal entries to recognize the initial investment of the partners.
Income Statement
Owner’s Equity Statement
Liabilities and Owner's Equity Portion of Balance Sheet
Closing entries as of December 31, 2025
Expert Answer:
1Journal entry Date Description Debit Credit 1 Cash 8800 Accounts Receivable 22000 OMendez Capital 2... View the full answer
