Formation of partnership Assume that two individuals agree to form a partnership. Partner A is contributing an operating business that reports the following balance sheet: Cash $5,000 Accounts payable $15,000 Receivables 10,000 Accrued liabilities Inventories 20,000 Total liabilities 10,000 $25,000 Total assets $35,000 Net assets $10,000 Partner B is contributing cash of $25,000. The partners agree that the initial capital of the partnership should be shared equally. Prepare the journal entry to record the capital contributions of the partners using both the Bonus Method and the Goodwill Method.

Formation of partnership Assume that two individuals agree to form a partnership. Partner A is contributing an operating business that reports the following balance sheet: Cash $5.000 Accounts payable $15,000 Receivables 10.000 Accrued liabilities 10,000 Inventories 20.000 Total abilities Total assets $35.000 Net assets $25,000 $10,000 Partner B is contributing cash of $25,000. The partners agree that the initial capital of the partnership should be shared equally. Prepare the journal entry to record the capital contributions of the partners using both the Bonus Method and the Goodwill Method Description Bonus Method Cash Receivables Debit Credit 0 0 B D Accounts payable 0. Accrued abilities 0 Partner B Capital 10 Goodwill Method Cash 0 0 Receivables Inventories 0 D 0 Accounts payable 0 Accrued abilities D D Partner A Capital 0 0 Check