11:52 LTE assignment 1 ACC 200 Spring 20.. Question 1 Mr A and Mr B operate separate auto repair shops. On January 1, 2005, they decide to combine their separate businesses which were operated as proprietorships to form A & B Auto Repair, a partnership. Information from their separate balance sheets is presented below Cash $10,000$12,000 Accounts receivable 9,000 7,000 Allowance for doubtful accounts 1,000 500 Accounts payable 5,000 6,000 Notes payable3,000 Salaries payable 1,000 1,500 Equipment 12,000 24,000 Accumulated amortization-Equipment 2,000 4,000 It is agreed that the expected realizable value of A accounts receivable is $8,000 and B receivables is $5,000. The fair market value of A equipment is $15,000 and the value of B's equipment is $20,000. It is further agreed that the new partnership will assume all iabilities of the proprietorships with the exception of the notes payable on B's balance sheet which he will pay himself Instructions: Prepare the journal entries necessary to record the formation of the partnership. Solution Question 2: 11:52 LTE assignment 1 ACC 200 Spring 20.... Accumulated a quipment 2,000 4,000 It is agreed that the expected realizable value of A accounts receivable is $8,000 and B receivables is $5,000. The fair market value of A equipment is $15,000 and the value of B's equipment is $20,000. It is further agreed that the new partnership will assume all iabilities of the proprietorships with the exception of the notes payable on B's balance sheet which he will pay himself Instructions: Prepare the journal entries necessary to record the formation of the partnership. Solution Question 2: Ali &Ahmed Co. reports net income of $40,000. The partnership agreement provides for annual salaries of $24,000 for Ali and $15,000 for Ahmed and interest allowances of $4,000 to Ali and $6,000 to Ahmed. Any remaining income or loss is to be shared 70% by Ali and 30% by Ahmed. Instructions: Compute the amount of net income distributed to each partner. Solution question 2