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28 October, 05:27

Jesse and Tim form a partnership by combining the assets of their separate businesses. Jesse contributes accounts receivable with a face amount of $45,000 and equipment with a cost of $175,000 and accumulated depreciation of $101,000. The partners agree that the equipment is to be valued at $68,200, that $3,400 of the accounts receivable are completely worthless and are not to be accepted by the partnership, and that $1,600 is a reasonable allowance for the uncollectibility of the remaining accounts receivable. Tim contributes cash of $22,000 and merchandise inventory of $45,500. The partners agree that the merchandise inventory is to be valued at $49,000. Required:

Journalize the entries to record in the partnership accounts (a) Jesse's investment and (b) Tim's investment. Refer to the Chart of Accounts for exact wording of account titles.

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  1. 28 October, 05:35
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    The Journal entries with their narrations of Jesse's investment and Tim's investment is shown below:-

    Explanation:

    a. Jesse's investment

    Accounts Receivable Dr, $41,600

    ($45,000 - $3,400)

    Agreed price of equipment Dr, $68,200

    To allowance for doubtful debts $1,600

    To capital account $108,200

    (Being Jesse's investment is recorded)

    b. Tim's investment

    Cash Dr, $22,000

    Agreed price of inventory Dr, $49,000

    To Tim capital $71,000

    (Being Tim's investment is recorded)
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