Solved: Sorensen and lucas decide to form a partnership solu, Accounting Basics

Sorensen and lucas decide to form a partnership solu

The post-closing trial balances of two proprietorships on January 1, 2014, are presented below.

Sorensen Company			Lucas Company
Dr.	Cr.	Dr.	Cr.
Cash	$14,210	$11,950
Accounts receivable	17,740	25,680
Allowance for doubtful accounts	$3,100	$4,310
Inventory	26,800	18,340
Equipment	45,020	28,890
Accumulated depreciation-equipment	24,020	11,340
Notes payable	18,480	14,620
Accounts payable	22,090	31,480
Sorensen, capital	36,080
Lucas, capital	23,110
$103,770	$103,770	$84,860	$84,860

Sorensen and Lucas decide to form a partnership, Solu Company, with the following agreed upon valuations for noncash assets.

Sorensen Company	Lucas Company
Accounts receivable	$17,740	$25,680
Allowance for doubtful accounts	4,960	4,400
Inventory	28,120	20,000
Equipment	25,060	15,780

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 Sorensen will invest an additional $5,130 in cash, and Lucas will invest an additional $21,820 in cash.

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