Thomas Richey operates a small shop that sells fishing equipment. His post-closing trial balance on December 31, 2020, is shown below.
Richey Tackle Center
Post-closing Trial Balance
December 31, 2020
Account Name	Debit	Credit
Cash	$19,000
Accounts Receivable	65,600
Allowance for Doubtful Accounts		$10,000
Merchandise Inventory	180,000
Furniture and Equipment	116,400
Accumulated Depreciation		92,000
Accounts Payable		16,000
Richey, Capital		263,000
Totals	$381,000	$381,000

Richey plans to enter into a partnership with Kathryn Price, effective January 1, 2022. Profits and losses will be shared equally. Richey is to transfer all assets and liabilities of his store to the partnership after revaluation as agreed. Price will invest cash equal to Richey’s investment after revaluation. The agreed values are Accounts Receivable (net), $58,000; Merchandise Inventory, $199,600; and Furniture and Equipment, $49,200. The partnership will operate as Richey and Price Angler’s Outpost.

 

1. Record the journal entry to record the receipt of Richey's investment of assets and liabilities by the partnership. The agreed values are Accounts Receivable (net) $58,000; Merchandise Inventory, $199,600; and Furniture and Equipment, $49,200.

2. Record the journal entry to record the receipt of Price's cash investment in the partnership.

3. Prepare the balance sheet after the formation of the partnership.

4. By what net amount were the net assets of Richey's Tackle Center adjusted before they were transferred to the partnership?

5. Before the revaluation, what was the balance in Richey's capital account in the ledger of Richey's Tackle Center (sole proprietorship)?

6. Immediately after the revaluation, what was the balance in Richey's capital account in the ledger of Richey and Price Angler's Outpost (partnership)?