On January 1, 2010, Ruben Ho and Clay Runnerup formed the Ruben and Clay Partnership by investing the following assets and liabilities in the business:
Book valueBook value
An independent appraiser believes that Ruben's equipment has a market value of $29,000 and Clay's equipment has a market value of $47,500. The appraiser indicates Ruben's building has a current value of $90,000 and Clay's building has a current value of $110,000. The appraiser further indicates that Ruben's land has a current value of $78,000 and Clay's land has a current value of $80,000. Ruben and Clay agree to share profits and losses in a 60:40 ratio. During the first year of operations, the business net income income of $74,000. Each partner withdrew $30,000 cash.
a)Refer to Table 12. Prepare the journal entries to record the initial investments in the business by Ruben and Clay.
b)Refer to Table 12. Prepare a balance sheet dated January 1, 2010, after the completion of the initial journal entries.
139) Refer to Table 12. Determine the capital balances of Ruben Ho and Clay Runnerup, on December 31, 2010, after the completion of their first year of operations.