Accounting for Partnerships

The post-closing trial balances of two proprietorships on January 1, 2019, are presented below.

All cash will be transferred to the partnership, and the partnership will assume all the liabilities of the two proprietorships. Further, it is agreed tat Sorensen will invest an additional $5,000 in cash, and Lucas will invest an additional $19,000 in cash.

Instructions

1. Prepare separate journal entries to record the transfer of each proprietorship's assets and liabilities to the partnership.
2. Journalize the additional cash investment by each partner.
3. Prepare a classified balance sheet for the partnership on January 1, 2019.

Solution