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28 November, 11:25

Barton and Fallows form a partnership by combining the assets of their separate businesses. Barton contributes accounts receivable with a face amount of $48,000 and equipment with a cost of $186,000 and accumulated depreciation of $105,000. The partners agree that the equipment is to be valued at $90,000, that $3,700 of the accounts receivable are completely worthless and are not to be accepted by the partnership, and that $1,900 is a reasonable allowance for the uncollectibility of the remaining accounts receivable. Fallows contributes cash of $28,300 and merchandise inventory of $56,000. The partners agree that the merchandise inventory is to be valued at $60,500. Journalize the entries to record in the partnership accounts (a) Barton's investment and (b) Fallows's investment. If an amount box does not require an entry, leave it blank. (a) (b)

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  1. 28 November, 11:31
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    Answer and Explanation:

    The Journal entry is shown below:-

    1. Equipment Dr, $90,000

    Accounts receivable Dr, $44,300

    ($48,000 - $3,700)

    To Accumulated depreciation - equipment $1,900

    To Barton's capital $132,400

    (Being Barton capital contribution in the form of accounts Receivable and equipment as per agreed terms is recorded)

    2. Cash account Dr, $28,300

    Merchandise Inventory Account Dr, $60,500

    To Fallows's Capital Account $88,800

    (Being Fallows capital contribution in the form of merchandise inventory and cash as per agreed terms)
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