Smiles and Scowls,two Sole Traders Form a Partnership by Combining

question 5

Multiple Choice

Smiles and Scowls,two sole traders form a partnership by combining their net assets. $\begin{array}{lcc} \text { Smiles contributes: }\\& \text { Cost value } & \text { Fair value } \\\text { Accounts Receivable } & \$ 10000 & \$ 8500 \\\text { Cash } & \$ 20000 &\\\text { Scowls contributes: }\\\text { Plant } & \$ 30000 & \$ 25000 \\\text { Accumulated Depreciation } & \$ 8000 & \\\text { Bank Overdraft } & \$ 11000 &\end{array}$ What will be the amount shown in the Allowance for Doubtful Debts account in the Balance sheet prepared after the formation of the partnership of Smiles and Scowls?

• A)Nil
• B)$1500
• C)$1000
• D)$500

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