TWO SOLE PROPRIETORSHIPS COMBINED TO FORM A PARTNERSHIP

NEW SET OF BOOKS OPENED FOR THE PARTNERSHIP

Assume that Carol Cari$$o and Norie Cruz, who are both operating their own boutiques, decid

to combine their resources and form a partnership to be known as Carie Boutique. The trial balanc

of the two businesses as of January $2,2000$ are as follows:

Carol Cari$$o

Trial Balance

January $2,2000$

Norie Cruz

Trial Balance

January $2,2000$

Carol and Norie agreed, among other things, on the following adjustments:

The fair market value of the merchandise inventory of Carol Carino is $F950,000.$

The equipment owned by Carol Cari$$o has been over$-$depreciated by $10,000.$

Accrued Utilities Payable for Carol Cari$$o and Norie Cruz are $4,000$ and $2,500,$

respectively.

The merchandise inventory of Norie Cruz is understated by $50,000.$

The prepaid insurance account is to be written off.

The allowance for doubtful accounts is to be adjusted to $10\%$ of accounts receivable.