Edward Vinzant operates a store that sells paintings and portraits by local artists. Vinzant has agreed to enter into a partnership with Shirley Cosby, effective January 1, 2016. The new firm will be called The Artist's Supply. Vinzant is to transfer the assets and liabilities of his business to the partnership at the values agreed on. Cosby will invest cash that is equal to Vinzant's investment after revaluation. The accounts shown on Vinzant's books and the agreed-on value of assets and liabilities follow:

Instructions
1. Prepare the general journal entries to record the following transactions on the books of the partnership on January 1, 2016:
a. Receipt of Vinzant's investment of assets and liabilities.
b. Receipt of Cosby's investment of cash.
2. Prepare a balance sheet for the partnership as of the beginning of its operations on January 1, 2016.
Analyze: If Shirley Cosby agreed to a cash investment equal to 80 percent of the value of Edward Vinzant's investment, what would the balance of Shirley Cosby's capital account be after the formation of the partnership?

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Balances Shown in Vinzant's Records Value Agreed to by Partners Assets Transferred Cash Accounts Receivable Allowance for Doubtful Accounts Merchandise Inventory Furniture and Equipment Accumulated Depreciation Total Assets Liabilities and Owner's Equity Transferred Accounts Payable Edward Vinzant, Capital S 18,000 S 18,000 S 18,000 2,000 16,000 192,000 13,600 172,000 47,600 108,000 82,000 26,000 S252,000 S251,200 16,000 S235,200 S252,000