Will Clark operates a store that sells computer software. Clark has agreed to enter into a partnership with Pettit, effective Jan 1, 2010 the new firm will be contemporary computing. Clark is to transfer all assets and liabilities of his firm to the partnership at the values agreed on. Pettit will invest cash that is equal to 80 percent of Clark's investment after revaluation. The accounts shown on Clarks books and the agreed- on value of assets and liabilities are shown below.
1. Prepare the general ledger journal entries to record the following transactions in the books of the partnership on January 1,2010
Balances shown in value agree to
Clark's records by partners
Assets transferred
Cash 20,000 20000
Accounts receivable 58000
Allowance for doubtful 20000 56000 53600
Merchandise inventory 334,000 346,000
Furniture and equipment 112000
Accumulated depreciation 46,000 66000
Total assets 476000 491200
Liabilities and owners' equity transferred
Accounts payable 44000 44000
Will Clark capital 432000 432000
a. Receipts of Clarks investments of assets and liabilities
b. Receipt of pettis investment in cash
2. Prepare a balance sheet for the partnerships of the beginning of its operations on January 1, 2010
Analyze: based on the balance sheet you prepared, what percentage (to the nearest 1/10 of 1%)of total equity is owe?