17 Chapter 1 - Accounting for Parmership Formation & Operation PROBLEM 1-1 For several years, Deejay and Joshua have been operating their own retail pharmacies as sole proprietorships. They decided that several advantages could be gained if they combine their businesses into one operation. They leased a new facility and began operations as a partnership on January 2, of the current year. Deejay was able to find a buyer for his prior business and sold it as a going concern. Joshua did not have an opportunity to sell his business so he transferred as many asserts as possible to the new partnership. The following assets were contributed by Deejay and Joshua to start their new business: Deejay 375,000 Joshua BV MV 82,000 82,000 48,000 40,000 225,000 220,000 24,000 8,000 (12,000) 38,500 20,000 Cash Accounts Receivable Inventory (merchandise) Furnishings Accumulated Depreciation on Furnishings General Office Equipment Accumulated Depreciation on Equipment Computer System Accumulated Depreciation on System Computer Software (undepreciated balance) Total (20,000) 23,200 (17,200) 5,000 5,000 396,500 0 375,000 375,000 Accounts payable (assumed by the partnership) 25,000 25,000 Required: 1. How much will be the opening capital of Deejay and Joshua? 2. Journalize the initial investment in the book of the partnership. 3. Assuming that the partners agree to have an equal capital in the partnership, using the transfer of capital method, how much is the initial capital of Joshua? PROBLEM 1 - 2