Question - Tupper and Tolin have decided to form a partnership to provide environmental testing services to industry. The individuals will share profits equally and have conveyed the following assets and liabilities to the partnership:
|
Fair Value
|
Book Value
|
Fair Value
|
Book Value
|
|
Cash
|
$20,000
|
$20,000
|
$ -
|
$ -
|
|
Equipment basis
|
12,000
|
10,000
|
34,000
|
40,000
|
|
Vehicles basis
|
|
|
6,000
|
6,000
|
|
Notes payable*
|
8,000
|
6,000
|
20,000
|
22,000
|
* Associated with equipment
Required:
1) Calculate the capital balance of each partner in the partnership subsequent to the contributions.
2) Prepare the journal entry necessary to record the partners' contributions.