Terrell Owens operates a small shop that sells fishing equipment. His postclosing trial balance on December 31, 2019, is shown below.
Owens plans to enter into a partnership with Cathy Turner, effective January 1, 2020. Profits and losses will be shared equally. Owens is to transfer all assets and liabilities of his store to the partnership after revaluation as agreed. Turner will invest cash equal to Owens€™s investment after revaluation. The agreed values are Accounts Receivable (net), $29,000; Merchandise Inventory, $99,800; and Furniture and Equipment, $24,600. The partnership will operate as Owens and Turner Angler€™s Outpost.

INSTRUCTIONS
1. In general journal form, prepare the entries to record:
a. The receipt of Owens€™s investment of assets and liabilities by the partnership.
b. The receipt of Turner€™s investment of cash.
2. Prepare a balance sheet for Owens and Turner Angler€™s Outpost just after the investments.
Analyze: By what net amount were the net assets of Owens Tackle Center adjusted before they were transferred to the partnership?

Transcribed Image Text:

Owens Tackle Center Postclosing Trlal Balance December 31, 2019 ACCOUNT NAME DEBIT CREDIT 9500 00 32 8 0 0 00 Cash Accounts Receivable 5 0 00 00 Allowance for Doubtful Accounts 90 000 00 58 2 0 0 00 Merchandise Inventory Furniture and Equipment | Accumulated Depreciation 46 0 0 0 00 Accounts Payable 8000 00 131 5 00 00 190 5 00 00 Capital 190 5 0 0 00 Totals