Problem 12-1A

The post -closing trial balances of two proprietorships on January 1, 2014, are presented below

	Sorensen Company Lucas Company
	Dr	Cr	Dr	Cr
Cash	$14,500		$11,950
Account receivable	17,390		26,180
Allowance for doubtful accounts		$2,900		$4,620
Inventory	26,320		17,960
Equipment	44,530		28,510
Accumulated depreciation-equipment		24,350		11,400
Notes payable		18,130		15,110
Accounts payable		22,240		30,790
Sorensen, capital		35,070
Lucas, capital				22,680
Total	$102,690	$102,690	$84,600	$84,600

Sorensen and Lucas decide to form a partnership, Solu Companyy, with the following agreed upon valuations dor noncash assets.

	Sorensen Company	Lucas Company
Accounts receivable	$17,390	$26,180
Allowance for doubtful accounts	4,990	4,050
Inventory	27,830	19,580
Equipment	25,130	15,930

All cash will be transferred tp the partnership, and the partnership will assume all the liabilities of the two proprietorships. Further, it agreed that Sorensen will invest an additional $5,120 in cash, and Lucas will invest an additional $20,870 in cash.

(a) Prepare separate journal entries to record the transfer of each proprietorship's assets and liabilities to the partnership.

(b) Journalize the additional cash investment by each partner.

(c) Prepare a classified balance sheet for the partnership on January 1, 2014