When Alice and Betty decided to incorporate their partnership, the trial balance was as follows:

The partnership's books will be closed, and new books will be used for A \& B Corporation. The following additional information is available:
1. The estimated fair values of the assets are:

2. All assets and liabilities are transferred to the corporation.
3. The common stock is \(\$ 10\) par. Alice and Betty receive a total of 7,100 shares.
4. The partners' profit and loss sharing ratio is shown in the trial balance.
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a. Prepare the entries on the partnership's books to record (1) the revaluation of assets, (2) the transfer of the assets to the A \& B Corporation and the receipt of the common stock, and (3) the closing of the books.

b. Prepare the entries on A \& B Corporation's books to record the assets and the issuance of the common stock.

Transcribed Image Text:

Cash Accounts Receivable (net) Inventory Equipment (net) Debit $ 8,000 Credit 22,400 36,000 47,200 Accounts Payable $ 17.200 Alice. Capital (60%) 62.400 Betty, Capital (40%) 34.000 Total $113,600 $113.600