Problem 12-01A a-c (Part Level Submission) (Video)

The post-closing trial balances of two proprietorships on January 1, 2020, are presented below.

		Sorensen Company				Lucas Company
		Dr.		Cr.		Dr.		Cr.
Cash		$14,000				$12,000
Accounts receivable		17,500				26,000
Allowance for doubtful accounts				$3,000				$4,400
Inventory		26,500				18,400
Equipment		45,000				29,000
Accumulated depreciationequipment				24,000				11,000
Notes payable				18,000				15,000
Accounts payable				22,000				31,000
Sorensen, capital				36,000
Lucas, capital								24,000
		$103,000		$103,000		$85,400		$85,400

Sorensen and Lucas decide to form a partnership, Solu Company, with the following agreed upon valuations for noncash assets.

		Sorensen Company		Lucas Company
Accounts receivable		$17,500		$26,000
Allowance for doubtful accounts		4,500		4,000
Inventory		28,000		20,000
Equipment		25,000		15,000

All cash will be transferred to the partnership, and the partnership will assume all the liabilities of the two proprietorships.