Brad Simmons, sole proprietor of a hardware business, decides to form a partnership with Rich Winter. Brad's accounts are as follows: Book Value Market Value Cash $ 30 , 000 $ 30 , 000 Accounts Receivable (net) 55 , 000 45 , 000 Inventory 112 , 000 135 , 000 Land 40 , 000 100 , 000 Buil ding (net) 500 , 000 540 , 000 Accounts Payable 25 , 000 25 , 000 Mortgage Payable 125 , 000 125 , 000 \begin{array}{lrr} & ext { Book Value } & ext { Market Value } \ ext { Cash } & \$ 30,000 & \$ 30,000 \ ext { Accounts Receivable (net) } & 55,000 & 45,000 \ ext { Inventory } & 112,000 & 135,000 \ ext { Land } & 40,000 & 100,000 \ ext { Buil ding (net) } & 500,000 & 540,000 \ ext { Accounts Payable } & 25,000 & 25,000 \ ext { Mortgage Payable } & 125,000 & 125,000\end{array} Cash Accounts Receivable (net) Inventory Land Buil ding (net) Accounts Payable Mortgage Payable Book Value $30 , 000 55 , 000 112 , 000 40 , 000 500 , 000 25 , 000 125 , 000 Market Value $30 , 000 45 , 000 135 , 000 100 , 000 540 , 000 25 , 000 125 , 000 Rich agrees to contribute $170,000 for a 20% interest. Journalize the entries to record(a) Brad's investment and(b) Rich's investment.

Question

Brad Simmons, sole proprietor of a hardware business, decides to form a partnership with Rich Winter. Brad's accounts are as follows:​    Book Value   Market Value   Cash  $ 30 , 000 $ 30 , 000  Accounts Receivable (net)  55 , 000 45 , 000  Inventory  112 , 000 135 , 000  Land  40 , 000 100 , 000  Buil ding (net)  500 , 000 540 , 000  Accounts Payable  25 , 000 25 , 000  Mortgage Payable  125 , 000 125 , 000 \begin{array}{lrr}  &  	ext { Book Value }  &  	ext { Market Value } \	ext { Cash }  &  \$ 30,000  &  \$ 30,000 \	ext { Accounts Receivable (net) }  &  55,000  &  45,000 \	ext { Inventory }  &  112,000  &  135,000 \	ext { Land }  &  40,000  &  100,000 \	ext { Buil ding (net) }  &  500,000  &  540,000 \	ext { Accounts Payable }  &  25,000  &  25,000 \	ext { Mortgage Payable }  &  125,000  &  125,000\end{array}  Cash   Accounts Receivable (net)   Inventory   Land   Buil ding (net)   Accounts Payable   Mortgage Payable  ​  Book Value  $30 , 000 55 , 000 112 , 000 40 , 000 500 , 000 25 , 000 125 , 000 ​  Market Value  $30 , 000 45 , 000 135 , 000 100 , 000 540 , 000 25 , 000 125 , 000 ​   Rich agrees to contribute $170,000 for a 20% interest. Journalize the entries to record(a) Brad's investment and(b) Rich's investment.

Zybrea Knight · Accepted Answer

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