Wendy Reichstein and Sonia Datta operate separate auto repair shops. On January 15, 2021, they decided to combine their businesses, which had been operated as proprietorships, to form Wendy & Sonia Auto Repair, a partnership. Information from their separate balance sheets is presented below:

		Wendy Auto Repair		Sonia Auto Repair
Cash		$8,300		$1,600
Accounts receivable		7,400		32,100
Allowance for doubtful accounts		800		1,500
Accounts payable		3,900		8,500
Notes payable		-		15,000
Salaries payable		-		1,100
Equipment		8,700		28,000
Accumulated depreciation - equipment		2,200		16,000

It is agreed that the expected realizable value of Wendy's accounts receivable is $4,900 and Sonia's receivables is $29,400. The fair market value of Wendy's equipment is $7,100 and Sonia's equipment is $9,500. It is further agreed that the new partnership will assume all liabilities of the proprietorships with the exception of the note payable on Sonia's balance sheet, which she will pay herself.

Prepare the journal entries necessary to record the formation of the partnership. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 15, 2021	Salaries PayableAccounts PayableW. Reichstein, CapitalAllowancefor Doubtful AccountsEquipmentCashS. Datta, CapitalAccountsReceivable
	Accounts PayableS. Datta, CapitalEquipmentAllowance for DoubtfulAccountsW. Reichstein, CapitalCashAccounts ReceivableSalariesPayable
	Accounts ReceivableCashEquipmentSalaries PayableW. Reichstein,CapitalS. Datta, CapitalAllowance for Doubtful AccountsAccountsPayable
	Accounts ReceivableAllowance for Doubtful AccountsSalariesPayableAccounts PayableW. Reichstein, CapitalCashEquipmentS. Datta,Capital
	Allowance for Doubtful AccountsAccounts ReceivableAccountsPayableSalaries PayableW. Reichstein, CapitalS. Datta,CapitalCashEquipment
	Allowance for Doubtful AccountsAccounts PayableCashW.Reichstein, CapitalEquipmentSalaries PayableAccounts ReceivableS.Datta, Capital
	(To record Wendy's auto repair)
Jan. 15, 2021	W. Reichstein, CapitalEquipmentSalaries PayableAllowance forDoubtful AccountsAccounts ReceivableS. Datta, CapitalCashAccountsPayable
	EquipmentSalaries PayableAccounts PayableS. Datta,CapitalAccounts ReceivableCashAllowance for Doubtful AccountsW.Reichstein, Capital
	S. Datta, CapitalAccounts PayableAllowance for DoubtfulAccountsEquipmentW. Reichstein, CapitalCashAccountsReceivableSalaries Payable
	Salaries PayableW. Reichstein, CapitalS. Datta,CapitalEquipmentAllowance for Doubtful AccountsAccountsPayableAccounts ReceivableCash
	Accounts ReceivableSalaries PayableCashS. Datta, CapitalW.Reichstein, CapitalAllowance for Doubtful AccountsEquipmentAccountsPayable
	S. Datta, CapitalW. Reichstein, CapitalAccountsReceivableAccounts PayableCashAllowance for DoubtfulAccountsSalaries PayableEquipment
	Salaries PayableAccounts PayableS. Datta, CapitalEquipmentW.Reichstein, CapitalAccounts ReceivableAllowance for DoubtfulAccountsCash
	(To record Sonia's auto repair)

Answer rating: 100% (QA)

Date General Journal Debit Credit Jan 15 2021 Cash 8300 Accounts r... View the full answer