Carefully consider the post-closing trial balances of two proprietorships on January 1, 2017…

Carefully consider the post-closing trial balances of two proprietorships on January 1, 2017…

Carefully consider the post-closing trial balances of two proprietorships on January 1, 2017.
S Company L Company
$ $ $ $
Dr. Cr Dr Cr
Cash 14,000 12,000
Accounts Receivable 17,500 26,000
Allowances for doubtful debts 3,000 4,400
Inventory 26,500 18,400
Equipment 45,000 29,000
Accumulated Depreciation (Equipment) 24,000 11,000
Notes Payable 18,000 15,000
Accounts Payable 22,000 31,000
S Capital 36,000
L Capital 24,000
—————– ———– ———– ———–
103,000 103,000 85400 85,400
—————– ———– ———– ———–
S & L decide to form a partnership. Smart Partners, with the following agreed upon valuations for non-cash assets.
S Company L Company
Accounts Receivable $17,500 $26,000
Allowance for doubtful accounts 4,500 4,000
Inventory 28,000 20,000
Equipment 25,000 15,000
All cash will be transferred to the partnership and the partnership will assume all the liabilities of the two proprietorships. Further, it is agreed that S will invest an additional $5,000 in cash and L will invest an additional $19,000 in cash.
You are required to carry out the following tasks.
I Prepare separate journal entries to record the transfer of each proprietorship’s assets and liabilities to the partnership.
II Journalize the additional cash investments by each partner.
III Prepare a classified balance sheet for the partnership on January 1, 2017.
IV Discuss the differences between Sole-Proprietorship and Partnership
V Critically comment on the contributions of each partners to the new Partnership.

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