Joe Mann and Sam Trane operate separate auto repair shops. On January 1, 2012, they decide to combine their separate businesses which were operated as proprietorships to form M & T Auto Repair, a partnership. Information from their separate balance sheets is presented below:

It is agreed that the expected realizable value of Mann's accounts receivable is $11,000 and Trane's receivables is $7,000. The fair value of Mann's equipment is $13,000 and the value of Trane's equipment is $20,000. It is further agreed that the new partnership will assume all liabilities of the proprietorships with the exception of the notes payable on Trane's balance sheet which he will pay himself.
Instructions
Prepare the journal entries necessary to record the formation of thepartnership.

Transcribed Image Text:

Mann Auto Repair Trane Auto Repair Cash Accounts receivable Allowance for doubtful accounts Accounts payable Notes payable $10,000 12,000 1,000 5,000 $14,000 10,000 500 6.000 3,000 1,000 12,000 2,000 aries and wages payable Sala Equipment Accumulated depreciation-equipm ent 24,000 4.000