The trial balances of two proprietorships on January 1, 2024, follow:

Domic and Dasilva decide to form a partnership on January 1 and agree on the following valuations for the noncash assets that they are each contributing: 

All of the assets in each of the proprietorships will be transferred to the partnership. The partnership will also assume all the liabilities of the two proprietorships. Domic and Dasilva are also agreed that Dasilva will invest the amount of cash required so their investments in the partnership are equal. 

Instructions 

a. What are the advantages and disadvantages for these two individuals of forming a partnership as opposed to setting up a corporation? 

b. Prepare separate journal entries to record the transfer of each proprietorship’s assets and liabilities to the partnership on January 1. 

c. Journalize the additional cash investment. 

d. Prepare a balance sheet for the partnership as at January 1, 2024.

What are some of the advantages of two individuals such as Domic and Dasilva operating as a partnership instead of as two separate proprietorships?  

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Cash Accounts receivable Allowance for doubtful accounts Merchandise inventory Equipment Accumulated depreciation-equipment Accounts payable I. Domic, capital P. Dasilva, capital Domic Company Dr. Cr. $ 14,000 17,500 26,500 45,000 $ 3,000 24,000 40,000 36,000 Dasilva Company Dr. Cr. $12,000 26,000 18,400 29,000 $103,000 $103,000 $85,400 $ 4,400 11,000 46,000 24,000 $85,400