Mike Derr and Mark Finger form a partnership by combining assets of their separate businesses. The following balance sheet is from Derr's sole proprietorship. The market value of Derr's equipment is $5,000 and the market value of land is $8,000. Balance Sheet Assets Liabilities Cash $ 1,000 Accounts payable $ 4,500 Supplies 3,000 Notes payable 3,100 Equipment $ 11,000 Total liabilities 7,600 Accumulated depreciation-Equip. (9,000) 2,000 Equity Land 4,000 M. Derr, Capital 2,400 Total assets $ 10,000 Total liabilities and equity $ 10,000 Prepare the partnership's journal entry to record Derr's investment.

Question

Business

Harper Ellis

30 June, 02:18

Mike Derr and Mark Finger form a partnership by combining assets of their separate businesses. The following balance sheet is from Derr's sole proprietorship. The market value of Derr's equipment is $5,000 and the market value of land is $8,000. Balance Sheet Assets Liabilities Cash $ 1,000 Accounts payable $ 4,500 Supplies 3,000 Notes payable 3,100 Equipment $ 11,000 Total liabilities 7,600 Accumulated depreciation-Equip. (9,000) 2,000 Equity Land 4,000 M. Derr, Capital 2,400 Total assets $ 10,000 Total liabilities and equity $ 10,000 Prepare the partnership's journal entry to record Derr's investment.

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Daniela Hines · Answer 1

Answer and Explanation:

According to the scenario, journal entry for the given data are as follows:

Cash A/c Dr. $1,000

Supplies A/c Dr. $3,000

Land A/c Dr. $8,000

Equipment A/c Dr. $5,000

To A/c Payable A/c $4,500

To Notes payable A/c $3,100

To M. Derr capital A/c $9,400 ($1000+$3000+$8000+$5000-$4500-$3100)

(Being Derr's investment is recorded)