Asked by diksha pathria on May 13, 2024
Verified
Sonoma Company and Woodberry Company decide to merge their proprietorships into a partnership called Sonberry Company. The balance sheet of Woodberry Company shows: Accounts Receivable $18,000 Less: Allowance for doubtful accounts 1,500‾$16,500Equipment$20,000Less Accumulated depreciation-equip.10,000‾$10,000\begin{array}{lr}\text { Accounts Receivable } & \$ 18,000 \\\text { Less: Allowance for doubtful accounts } & \underline{1,500}&\$16,500\\\\\text {Equipment}&\$20,000\\\text {Less Accumulated depreciation-equip.}&\underline{10,000}&\$10,000\end{array} Accounts Receivable Less: Allowance for doubtful accounts EquipmentLess Accumulated depreciation-equip.$18,0001,500$20,00010,000$16,500$10,000 The partners agree that the net realizable value of the receivables is $16000 and that the fair value of the equipment is $15000.
Instructions
Indicate how the four accounts should appear in the opening balance sheet of the partnership.
Accumulated Depreciation
The total amount of depreciation expense that has been recorded against an asset since it was put into use, representing how much of its value has been used up.
Allowance
A provision in accounting for a reduction in the value of receivables or inventories, often related to potential bad debts or damaged goods.
Fair Value
The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
- Register the creation of a partnership, encompassing the valuation of assets and liabilities that are contributed.
Verified Answer
MT
Mari-world The hottestMay 19, 2024
Final Answer :
SONBERRY COMPANY Balance Sheet (partial) Assets ‾ Accounts Receivable $18,000 Less: Allowance for Doubtful Accounts 2,000‾$16,000 Equipment 15,000\begin{array}{c} \text { SONBERRY COMPANY}\\ \text { Balance Sheet (partial)}\\\begin{array}{lr} \underline{\text { Assets }}\\ \text { Accounts Receivable } & \$ 18,000 \\\text { Less: Allowance for Doubtful Accounts } & \underline{2,000} &\$16,000\\\text { Equipment } &&15,000\end{array}\end{array} SONBERRY COMPANY Balance Sheet (partial) Assets Accounts Receivable Less: Allowance for Doubtful Accounts Equipment $18,0002,000$16,00015,000
Learning Objectives
- Register the creation of a partnership, encompassing the valuation of assets and liabilities that are contributed.