Creation of New Subsidiary:
Krantz Company and Dull Corporation decided to form a partnership. Krantz agreed to transfer the following assets and accounts payable to K&D Partnership in exchange for 60 percent ownership:
Cost Book Value
Cash $ 10,000 $ 10,000
Inventory 30,000 30,000
Land 70,000 70,000
Buildings 200,000 150,000
Equipment 120,000 90,000
Accounts Payable 50,000 50,000
Dull agreed to contribute cash of $200.000 to K&D Partnership
Required:
1) Give the journal entries that K&D recorded for its receipt of assets and accounts payable from Krantz and Dull.
2) Give the journal entries that Krantz and Dull recorded for their transfer of assets and accounts payable to K&D Partnership.