Formation of partnership
Assume that two individuals agree to form a partnership. Partner A
is contributing an operating business that reports the following
balance sheet:

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Question: Formation of partnership Assume that two individuals agree to form a partnership. Partner A is co…
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Cash $10,000 Accounts payable $30,000
Receivables 20,000 Accrued liabilities 20,000
Inventories 40,000 Total liabilities $50,000
Total assets $70,000 Net assets $20,000

Partner B is contributing cash of $50,000. The partners agree
that the initial capital of the partnership should be shared
equally. Prepare the journal entry to record the capital
contributions of the partners using both the Bonus Method and the
Goodwill Method.

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