1. Moe and Larry decide to form a partnership. From their own businesses or personal assets they contribute the following assets which are shown at book value:

M contributes: BALANCE SHEET of Mr. M before forming Partnership

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Cash $10,000 A-Pay $15,000

A-Rec $20,000 N-Pay $30,000

Allow-Bad-Debt - 2,000 $18,000

Inventory $30,000

Equipment $100,000

Acc-Depreciation - 30,000 $70,000 M. Capital 83,000

$128,000 Total Liability + Equity $138,000

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L contributes BALANCE SHEET of Mr. L before forming Partnership

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Cash $50,000 A-Pay $5.000

Offices Supplies 1,000

__________________________________________________________________ L. Capital 46,000

Total Assets $51,000 Total Liab + Equity $51,000

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a. Moe and Larry agree that the FMV of the store equipment is $50,000, inventory is $25,000, net receivables is $17,000, and office supplies is $500. Larry agrees to give Moe additional credit of $10,000 due to Goodwill.

Moe & Larry agree that each partner will have equal capital balances in starting the partnership. Larry's Cash will be adjusted:

1) Record separate entries for each partner using the above data. Start a new set of books.

2) Prepare a balance sheet for the partnership after the above entries are made.

b. Re-do (1) but use Moe's existing books for partnership