Accounting for partner contributions, allocating profits and losses to

the partners, preparing partnership financial statements

agreed to contribute equal amounts of capital. Lally contributed her sole proprietorships

assets and liabilities (credit balances in parentheses) as follows:

Lallys Business

Book Value Current Market Value

Accounts Receivable $ 12,300 $ 10,600

Merchandise Inventory 47,000 38,000

Prepaid Expenses 3,600 3,400

Store Equipment, Net 41,000 28,000

Accounts Payable (24,000) (24,000)

value of Lallys partnership capital. The partners decided that Lally will earn 70%

30% of the profits. During the period ended December 31, the partnership earned

totaled $22,000.