Chapter 5
Partnerships
221
b) Prepare a journal entry to set up the partnership, and to record the additional investment.
Date
Account Title and Explanation
Debit
Credit
AP-3A (
3
)
The following four people started a partnership and brought the assets and liabilities listed
into the new business.
Biyanka Lee
Cash
$14,000
Accounts Receivable
5,000
Allowance for Doubtful Accounts
800
Note Payable
2,500
Larry Ding
Cash
$28,000
Building
240,000
Bob Fire
Cash
$55,000
Equipment
11,000
Accumulated Depreciation
1,000
Bank Loan
8,000
Freeda Red
Cash
$60,000
Note: An independent appraiser determined that the allowance for doubtful accounts should
be $600. All other assets are recorded at their fair market values.
