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Item 4

Item 4 5 points Item Skipped

When Alice and Betty decided to incorporate their partnership, its trial balance was as follows:

	Debit				Credit
Cash		$	8,900
Accounts Receivable (net)			23,700
Inventory			36,900
Equipment (net)			49,200
Accounts Payable						$	21,400
Alice, Capital (60%)							62,800
Betty, Capital (40%)							34,500
Total		$	118,700			$	118,700

The partnerships books will be closed, and new books will be used for A & B Corporation. The following additional information is available:

1. The estimated fair values of the assets follow:

Accounts Receivable	$	22,900
Inventory		33,700
Equipment		42,000

1. All assets and liabilities are transferred to the corporation.
2. The common stock is $10 par. Alice and Betty receive a total of 7,500 shares.
3. The partners profit and losssharing ratio is shown in the trial balance.

Required: a. Prepare the entries on the partnerships books to record (1) the revaluation of assets, (2) the transfer of the assets to A & B Corporation and the receipt of the common stock, and (3) the closing of the books.

No Event General Journal Debit Credit . 1 Alice, Capital Betty, Capital Accounts receivable (net) Inventory Equipment (net) B 2 Investment in A & B Corporation stock Accounts payable Cash Accounts receivable (net) Inventory Equipment (net) C 3 Alice, Capital Betty, Capital Investment in A & B Corporation stock b. Prepare the entries on A & B Corporation's books to record the assets and the issuance of the common stock. (If required for a transaction/event, select "No journal entry required" in the first account field.) Answer is not complete. Debit Credit No Event 1 General Journal Cash Accounts receivable (net) Inventory Equipment (net) Accounts payable Common stock Additional paid-in-capital