Montez and Flair Formed a Partnership

question 18

Essay

Montez and Flair formed a partnership.Montez contributed $15,000 cash and accounts receivable worth $11,000.Flair contributed cash of $5,000;inventory valued at $16,000;and supplies valued at $2,000.Prepare the journal entries to record each partner's investment in the new partnership.

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Definitions:

Significant Influence

The power to participate in the financial and operating policy decisions of another entity without controlling it.

Carrying Amount

The value of an asset as shown in the business’s accounts, reflecting its cost minus any depreciation or impairment charges.

Gain or Loss

The financial result that occurs when the selling price of an asset differs from its book value.