Dave Krug contributed $1,000 cash along with inventory and land to a new partnership. The inventory had a book value of $800 and a market value of $2,000. The land had a book value of $1, 400 and market value of $5,000. The partnership also accepted a $3,000 note payable owed by Krug to a creditor. Prepare the partnership's journal entry to record Krug's investment.

Question

Darryl Erickson

Business

16 December, 05:16

Dave Krug contributed $1,000 cash along with inventory and land to a new partnership. The inventory had a book value of $800 and a market value of $2,000. The land had a book value of $1, 400 and market value of $5,000. The partnership also accepted a $3,000 note payable owed by Krug to a creditor. Prepare the partnership's journal entry to record Krug's investment.

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Terrance Gonzales · Answer 1

cash 1,000 debit

inventory 2,000 debit

land 5,000 debit

note payable 3,000 credit

Krug capital Account 5,000 credit

Explanation:

The land and inventories will be accepted at his market value.

Along with cash this are assets which enter the partnership so they are debited.

The note payable decreases the Krug capital contribution. It is credited.

Krug capital account balance will be to complete the entry and make debit = credit.