Question
Brian McCarthy owns and operates a business called Brian's Music Shop. His postclosing trial balance on December 31, 2016, is provided below. Brian plans to
Brian McCarthy owns and operates a business called Brian's Music Shop. His postclosing trial balance on December 31, 2016, is provided below. Brian plans to enter into a partnership with Emma Jones, effective January 1, 2017. Profits and losses will be shared equally. Brian will transfer all assets and liabilities of his shop to the partnership, after revaluation. Emma will invest cash equal to Brian's investment after revaluation. The agreed values are: Accounts Receivable (net), $10,000; Merchandise Inventory, $35,000; and Store Equipment, $15,000. The partnership will operate under the name Beautiful Music. Record each partner's investment on page 1 of a general journal. Omit descriptions. Prepare a balance sheet for Beautiful Music just after the investments.
| Account Name | Debit | Credit |
| Cash | 14,000 | |
| Accounts Receivable | 11,000 | |
| Allowance for doubtful accounts | 1,000 | |
| Merchandise Inventory | 30,000 | |
| Store Equipment | 20,000 | |
| Accumulated Depreciation - store equip. | 8,000 | |
| Accounts Payable | 7,000 | |
| Blake Kredell, Capital | 59,000 | |
| Totals | 75,000 | 75,000 |
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Construction Guide Accounting And Knowledge Based Audits
Authors: CPA Eric P. Wallace
1st Edition
0808020870, 978-0808020875
