Dave Krug contributed $1,800 cash along with inventory and land to a new partnership. The inventory had a book value of $1,600 and a market value of $3,600. The land had a book value of $2,200 and a market value of $6,600. The partnership also accepted a $3,800 note payable owed by Krug to a creditor. Prepare the partnership's journal entry to record Krug's investment.

Question

Carolyn Meadows

Business

29 October, 18:07

Dave Krug contributed $1,800 cash along with inventory and land to a new partnership. The inventory had a book value of $1,600 and a market value of $3,600. The land had a book value of $2,200 and a market value of $6,600. The partnership also accepted a $3,800 note payable owed by Krug to a creditor. Prepare the partnership's journal entry to record Krug's investment.

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Kristen Mccullough · Answer 1

Answer and Explanation:

The Journal entry is shown below:-

Cash Dr, $1,800

Inventory Dr, $3,600

Land Dr, $6,600

To Notes payable $3,800

To Krug's Capital $8,200

(Being Krug's investment is recorded)

Therefore to record the

Here the assets are increasing so we debited the cash, inventory and land while the liabilities and stakeholder equity also increase so we credited the notes payable and Krug's capital.