On December 31, 2014 Grace and Rita agreed to form a partnership named GR Company. Shown...

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On December 31, 2014 Grace and Rita agreed to form a partnership named GR Company. Shown below are the balances of their accounts: Cash Accounts Receivable Allowance for doubtful accounts Merchandise Prepaid insurance Equipment Accumulated Depreciation Accounts payable Grace 100,000 180,000 5,000 200,000 20,000 150,000 50,000 260,000 Rita 150,000 250,000 10,000 d. Equipment should have a net book value of 80,000. e. An accrued expense is 10,000. 190,000 30,000 200,000 70,000 280,000 The partners agreed to make the following valuation of their contributions: Grace: a. Account receivable should have a net realizable value of 160,000. b. Merchandise should be valued at 220,000. c. Expired portion of prepaid insurance is 5,000. Rita: a. Account receivable should have a net realizable value of 230,000. b. Merchandise should be valued at 200,000. c. Expired portion of prepaid insurance is 8,000. d. Equipment should have a net book value of 150,000. e. An accrued expense is 10,000. Required 1. Compute the capital account balance of Grace and Rita prior to partnership formation. 2. Adjusting entries on the books of Grace and Rita. 3. Journal entries to record the formation of partnership. 4. Prepare a Statement of Financial Position of the partnership. On December 31, 2014 Grace and Rita agreed to form a partnership named GR Company. Shown below are the balances of their accounts: Cash Accounts Receivable Allowance for doubtful accounts Merchandise Prepaid insurance Equipment Accumulated Depreciation Accounts payable Grace 100,000 180,000 5,000 200,000 20,000 150,000 50,000 260,000 Rita 150,000 250,000 10,000 d. Equipment should have a net book value of 80,000. e. An accrued expense is 10,000. 190,000 30,000 200,000 70,000 280,000 The partners agreed to make the following valuation of their contributions: Grace: a. Account receivable should have a net realizable value of 160,000. b. Merchandise should be valued at 220,000. c. Expired portion of prepaid insurance is 5,000. Rita: a. Account receivable should have a net realizable value of 230,000. b. Merchandise should be valued at 200,000. c. Expired portion of prepaid insurance is 8,000. d. Equipment should have a net book value of 150,000. e. An accrued expense is 10,000. Required 1. Compute the capital account balance of Grace and Rita prior to partnership formation. 2. Adjusting entries on the books of Grace and Rita. 3. Journal entries to record the formation of partnership. 4. Prepare a Statement of Financial Position of the partnership.

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