dave krug contributed $1,400 cash along with inventory and land to a new partnership. the inventory had a…
dave krug contributed $1,400 cash along with inventory and land to a new partnership. the inventory had a market value of $2,800. the land had a market value of $5,800. the partnership also accepted a $3,400 note payable owed by krug to a creditor. prepare the partnerships journal entry to record krugs investment. view transaction list journal entry worksheet < a record the investment of krug. note: enter debits before credits. transaction general journal debit credit 1
Answer
Explanation:
Step1: Debit cash
Debit Cash account for the cash contribution of $1,400.
| Transaction | General Journal | Debit | Credit |
|---|---|---|---|
| 1 | Cash | $1,400 |
Step2: Debit inventory
Debit Inventory account for its market - value of $2,800.
| Transaction | General Journal | Debit | Credit |
|---|---|---|---|
| 1 | Inventory | $2,800 |
Step3: Debit land
Debit Land account for its market - value of $5,800.
| Transaction | General Journal | Debit | Credit |
|---|---|---|---|
| 1 | Land | $5,800 |
Step4: Credit note payable
Credit Note Payable account for the amount of $3,400 that the partnership assumes.
| Transaction | General Journal | Debit | Credit |
|---|---|---|---|
| 1 | $3,400 |
Step5: Credit partner's capital
Calculate the partner's capital as the net investment. The total debits are $1,400 + 2,800+5,800 = $10,000. After subtracting the note payable of $3,400, the credit to Dave Krug, Capital is $10,000 - 3,400=$6,600.
| Transaction | General Journal | Debit | Credit |
|---|---|---|---|
| 1 | $6,600 |
Answer:
| Transaction | General Journal | Debit | Credit |
|---|---|---|---|
| 1 | Cash | $1,400 | |
| Inventory | $2,800 | ||
| Land | $5,800 | ||
| Note Payable | $3,400 | ||
| Dave Krug, Capital | $6,600 |