Brian McCarthy Owns and Operates a Business Called Brian's Music

question 5

Essay

Brian McCarthy owns and operates a business called Brian's Music Shop. His postclosing trial balance on December 31, 2013, is provided below. Brian plans to enter into a partnership with Emma Jones, effective January 1, 2014. Profits and losses will be shared equally. Brian will transfer all assets and liabilities of his shop to the partnership, after revaluation. Emma will invest cash equal to Brian's investment after revaluation. The agreed values are: Accounts Receivable (net), $10,000; Merchandise Inventory, $35,000; and Store Equipment, $15,000. The partnership will operate under the name Beautiful Music. Record each partner's investment on page 1 of a general journal. Omit descriptions.
Prepare a balance sheet for Beautiful Music just after the investments.

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Definitions:

Direct Labor Budget

A financial plan that estimates the cost of the labor needed to meet production goals, including wages and hours.

Manufacturing Overhead Budget

A financial plan that estimates the costs of indirect materials, labor, and other expenses needed to operate a manufacturing facility.

Production Units

A measure of output from a production process, with one unit representing an item or a defined amount of service produced.

Unit Sales

The total number of individual items or units that a company has sold within a particular period.