Question

Mo Mulder and Molly Munchkin operate separate hobby shops. On April 8, 2021, they decide to combine their businesses, which had been operated as proprietorships, to form Mo & Molly Partnership. Information from their separate balance sheets is presented below:

		Mo's Models		Molly's Crafts
Cash		$7,000		$6,500
Accounts receivable		1,700		1,150
Allowance for doubtful accounts		300		100
Accounts payable		1,350		500
Equipment		2,100		1,000
Accumulated depreciation - equipment		700		400

It is agreed that the expected realizable value of Mo’s accounts receivable is $950 and Molly's receivables is $900. The fair market value of Mo’s equipment is $1,000 and Molly's equipment is $700. It is further agreed that the new partnership will assume all liabilities of the proprietorships.

(a)

Prepare the journal entries necessary to record the formation of the partnership. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Apr. 8, 2021	Accounts Payable    Equipment    Accounts Receivable    M. Mulder, Capital    Cash    M. Munchkin, Capital    Allowance for Doubtful Accounts
	M. Munchkin, Capital    M. Mulder, Capital    Accounts Payable    Cash    Equipment    Accounts Receivable    Allowance for Doubtful Accounts
	Accounts Payable    Accounts Receivable    Allowance for Doubtful Accounts    M. Mulder, Capital    M. Munchkin, Capital    Equipment    Cash
	Accounts Receivable    Cash    Equipment    Allowance for Doubtful Accounts    Accounts Payable    M. Mulder, Capital    M. Munchkin, Capital
	Equipment    Accounts Receivable    Allowance for Doubtful Accounts    M. Mulder, Capital    Cash    M. Munchkin, Capital    Accounts Payable
	M. Munchkin, Capital    M. Mulder, Capital    Accounts Payable    Cash    Accounts Receivable    Equipment    Allowance for Doubtful Accounts
	(To record Mo's Models)
Apr. 8, 2021	M. Mulder, Capital    Accounts Receivable    Allowance for Doubtful Accounts    Accounts Payable    M. Munchkin, Capital    Cash    Equipment
	M. Munchkin, Capital    Allowance for Doubtful Accounts    Accounts Receivable    Cash    Accounts Payable    M. Mulder, Capital    Equipment
	M. Mulder, Capital    M. Munchkin, Capital    Equipment    Accounts Payable    Cash    Allowance for Doubtful Accounts    Accounts Receivable
	M. Mulder, Capital    M. Munchkin, Capital    Allowance for Doubtful Accounts    Equipment    Accounts Receivable    Accounts Payable    Cash
	Allowance for Doubtful Accounts    Equipment    Accounts Payable    M. Mulder, Capital    M. Munchkin, Capital    Cash    Accounts Receivable
	Allowance for Doubtful Accounts    Accounts Receivable    Cash    Equipment    Accounts Payable    M. Mulder, Capital    M. Munchkin, Capital
	(To record Molly's Crafts)

Answer 1