On July 1, 20--, Susan Woodworth and Barbara Holly combine
Question and Solution
On July 1, 20--, Susan Woodworth and Barbara Holly combined their two businesses to form a partnership under the firm name of Woodworth and Holly. The balance sheets of the two sole proprietorships are shown below and on the next page. The balance sheets reflect fair market values except for the following: (a) The fair market value of Woodworth’s store equipment is $7,500. (b) The fair market values of Holly’s office equipment and store equipment are $6,100 and $6,800, respectively. REQUIRED Prepare the opening entry for the formation of the Woodworth and Holly 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.