Jesse and Tim form a partnership by combining the assets of their separate businesses. Jesse contributes accounts receivable with a face amount of $48,000 and equipment with a cost of $177,000 and accumulated depreciation of $104,000. The partners agree that the equipment is to be valued at $68,500, that $3,600 of the accounts receivable are completely worthless and are not to be accepted by the partnership, and that $2,500 is a reasonable allowance for the uncollectibility of the remaining accounts receivable. Tim contributes cash of $22,000 and merchandise inventory of $44,500. The partners agree that the merchandise inventory is to be valued at $48,000.

Required:
Journalize the entries to record in the partnership accounts (a) Jesse’s investment and (b) Tim’s investment. Refer to the Chart of Accounts for exact wording of account titles.

Check the explanation

Explanation:

Journal Entries to be recorded in the books of Partnership accounts

a)Jesse's Investment

Account Name                                           Debit($)             Credit($)

Accounts Receivable(48,000-3600)            44300  

Equipment(Agreed Price)               68,500  

Allowance for Doubtful Debts                                     2500

Jesse,Capital A/c(Balancing Figure)                   110300

b.Tim's Investment

Account Name                                             Debit($)      Credit($)

Cash                                                              22000  

Inventory(At Agreed price)                             48000  

Tim Capital                                                                         70,000

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