Problem $19\mathrm{.}2$A $($Algo$)$ Accounting for formation of a partnership. LO $19-3$

Terrell Owens operates a small shop that sells fishing equipment. His postclosing trial balance on December $31,20$X$1,$ is shown below.

Owens plans to enter into a partnership with Cathy Turner, effective January $1,20$X$2.$ Profits and losses will be shared equally. Owens is to transfer all assets and liabilities of his store to the partnership after revaluation as agreed. Turner will invest cash equal to Owens$$s investment after revaluation. The agreed values are Accounts Receivable $($net$),$ $$13,300$ Merchandise Inventory, $$48,700$ and Furniture and Equipment, $$11,100.$ The partnership will operate as Owens and Turner Angler$$s Outpost.

Owens Tackle Center

Postclosing Trial Balance

December $31,20$X$1$

Account Name Debit Credit

Cash $$3,550$

Accounts Receivable $14,600$

Allowance for Doubtful Accounts $$2,700$

Merchandise Inventory $43,800$

Furniture and Equipment $27,900$

Accumulated Depreciation $21,800$

Accounts Payable $2,800$

Capital $62,550$

Totals $$89,850$ $$89,850$

Required:

In general journal form, prepare the entries to record:

The receipt of Owens$$s investment of assets and liabilities by the partnership.

The receipt of Turner$$s investment of cash.

Prepare a balance sheet for Owens and Turner Angler$$s Outpost just after the investments.

Analyze:

By what net amount were the net assets of Owens Tackle Center adjusted before they were transferred to the partnership?