Question
Ray Barry owns and operates a retail business called Ray's Camera Shop. His postclosing trial balance on December 31, 20X1 is given below. Barry plans
Ray Barry owns and operates a retail business called Ray's Camera Shop. His postclosing trial balance on December 31, 20X1 is given below. Barry plans to enter into a partnership with Maria Santos, effective January 1, 20%2.
Profits and losses will be shared equally. Barry will transfer all assets and liabilities of his store to the partnership, after revaluation. Santos will invest cash equal to Barry's investment after revaluation. The agreed values are:
Accounts Receivable (net), $7,500: Merchandise Inventory, $25,000: and Store Equipment, $6,000. The partnership will operate under the name Photo World. Record each partner's investment on page 1 of the general journal below.
Cash 5,000 (debit)
Accounts Receivable 8,000 (debit)
Allowance for Doubtful Accounts 200 (credit)
Merchandise Inventory 24,000 (debit)
Store Equipment 12,000 (debit)
Accumulated Depreciation - Store Equipment 8,000 (credit)
Accounts Pavable 4,000 (credit)
Ray Barry, Capital 36,800 (credit)
Totals 49,000 (debit) 49,000 (credit)
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