Prepare separate journal entries to record the transfer of

Question

The post-closing trial balances of two proprietorships on January 1, 2010, are presented below.

Patrick and Samuelson decide to form a partnership, Pasa Company, with the following agreed upon valuations for noncash assets.

 

All cash will be transferred to the partnership, and the partnership will assume all the liabilities of the two proprietorships. Further, it is agreed that Patrick will invest an additional $5,000 in cash, and Samuelson will invest an additional $19,000 in cash.

Instructions

(a) Prepare separate journal entries to record the transfer of each proprietorship's assets and liabilities to the partnership.

(b) Journalize the additional cash investment by each partner.

(c) Prepare a classified balance sheet for the partnership on January 1,2010.