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Ron Marden and Tip Baker operate separate auto repair shops. On January 1, 2020, they decide to combine their separate businesses which were operated
Ron Marden and Tip Baker operate separate auto repair shops. On January 1, 2020, they decide to combine their separate businesses which were operated as proprietorships to form M & B Auto Repair, a partnership. Information from their separate balance sheets is presented below: Marden Auto Repair Baker Auto Repair Cash $10,500 $14,800 Accounts receivable 12,900 11,100 Allowance for doubtful accounts 1,500 4,200 Accounts payable 5,600 5,600 Notes payable 4,500 Salaries and wages payable 1,000 1,700 Equipment 12,700 22,200 Accumulated depreciation-equipment 2,100 4,500 It is agreed that the expected realizable value of Marden's accounts receivable is $11,400 and Baker's receivables is $6,900. The fair value of Marden's equipment is $13,900 and the value of Baker's equipment is $20,200. It is further agreed that the new partnership will assume all liabilities of the proprietorships with the exception of the notes payable on Baker's balance sheet which he will pay himself. Prepare the journal entries necessary to record the formation of the partnership. (Credit account titles are automatically indented when amount is entered. Do not indent manually. List all debit entries before credit entries.) Account Titles and Explanation Cash Accounts Receivable Equipment Allowance for Doubtful Accounts Salaries and Wages Payable Accounts Payable R. Marden, Capital (To record R. Marden's investment) Debit 10500 12900 13900 Credit 1500 1000 5600 24300 Cash Accounts Receivable Equipment Allowance for Doubtful Accounts Salaries and Wages Payable Accounts Payable T. Baker, Capital (To record Baker's investment) 14800 11100 20200 4200 1700 5600 18000
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