1. Lisa Holler and Chaim Ehrlich operate separate jewelry stores. On January 1, 2019, they decide to combine their separate businesses which were operated as proprietorships to form L & C Jewels, a partnership. Information from their separate balance sheets is presented below:

Lisa Holler Chaim Ehrlich

Cash $10,000 $14,000

Accounts receivable 12,000 10,000

Allowance for doubtful accounts 1,000 500

Accounts payable 5,000 6,000

Notes payable 3,000

Equipment 12,000 24,000

Accumulated depreciationequipment 2,000 4,000

It is agreed that the expected realizable value of Lisas accounts receivable is $10,000 and Chaims receivables is $7,000. The fair value of Lisas equipment is $13,000 and the value of Chaims equipment is $20,000. It is further agreed that the new partnership will assume all liabilities of the proprietorships.

Instructions

Prepare the journal entries necessary to record the formation of the partnership. Make a separate journal entry for each partner.