Journal entries to bring partners into partnership


Partners A and B have made a new partnership. A contributes $50,000 in cash and $20,000 in merchandise inventory; however $3000 is still owed to a creditor on account. B contributes a building which cost $150,000, however has been depreciated for $40,000, land worth $25,000, and accounts receivable with a book value of $60,000. The building has a mortgage owed on it of $45,000. The partners agree to accept all the liabilities on the assets and that $3000 of Partner B's accounts receivable is worthless and $5000 appears doubtful. They as well agree the building is really worth $250,000 because of the real estate market.

Give the two journal entries to bring the partners into the partnership.

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Accounting Basics: Journal entries to bring partners into partnership
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