Preparing partnership financial statements
On December 31, 2012, Dana Davis and Lou Ghai agree to combine their proprietorships into a partnership. Their balance sheets on December 31 are shown as follows.
|
Davis's Business
|
Ghai's Business
|
|
Book Value
|
Current Market Value
|
Book Value
|
Current Market Value
|
|
Assets
|
|
|
|
|
|
Cash
|
$9,000
|
$9,000
|
$6,000
|
$6,000
|
|
Accounts receivable
|
26,000
|
24,000
|
16,000
|
14,000
|
|
Inventory
|
49,000
|
43,000
|
38,000
|
38,000
|
|
Plant assets (net)
|
123,000
|
105,000
|
54,000
|
58,000
|
|
Total assets
|
$207,000
|
$181,000
|
$114,000
|
$116,000
|
|
Liabilities and Owners' Equity
|
|
|
|
|
|
Accounts payable
|
$24,000
|
$24,000
|
$12,000
|
$12,000
|
|
Accrued expenses payable
|
12,000
|
12,000
|
|
|
|
Notes payable
|
55,000
|
55,000
|
|
|
|
Davis, capital
|
116,000
|
?
|
|
|
|
Ghai, capital
|
|
|
102,000
|
?
|
|
Total liabilities and owners' equity
|
$207,000
|
$181,000
|
$114,000
|
116,000
|
Requirements
1. Journalize the contributions of Davis and Ghai to the partnership.
2. Prepare the partnership balance sheet at December 31, 2012.