On July 1, 20--, Lisa Bush and Wally Dodge combined their
Question and Solution
On July 1, 20--, Lisa Bush and Wally Dodge combined their two businesses to form a partnership under the firm name of Bush and Dodge. The balance sheets of the two sole proprietorships are shown below.
The balance sheets reflect fair market values except for the following: (a) The fair market value of Bush’s store equipment is $7,350. (b) The fair market values of Dodge’s office equipment and store equipment are $5,875 and $6,100, respectively. REQUIRED Prepare the opening entry for the formation of the Bush and Dodge partnership as of July 1, 20--, using fair market values. The difference between assets invested and liabilities assumed should be credited to each partner’s capital account. Neither partner has knowledge of any uncollectible accountsreceivable.