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Question
Gentry, sole proprietor of a hardware business, decides to form a partnership with Noel. Gentry’s accounts are as follows:
| Book Value | Market Value | |||
| Cash | $ 25,000 | $ 25,000 | ||
| Accounts Receivable (net) | 52,000 | 45,000 | ||
| Inventory | 112,000 | 125,000 | ||
| Land | 40,000 | 100,000 | ||
| Building (net) | 300,000 | 340,000 | ||
| Accounts Payable | 25,000 | 25,000 | ||
| Mortgage Payable | 145,000 | 145,000 | ||
Noel agrees to contribute $80,000 for a 20% interest. Journalize the entries for (a) Gentry’s investment and (b) Noel’s investment.
Answer
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