1Kathy and Steve are forming a partnership and thus need to

1--Kathy and Steve are forming a partnership and thus need to combine their assets. Kathy is contributing the following assets: $12,500 cash, $1,300 accounts receivable with $200 in allowance for doubtful accounts, and $37,000 in equipment with accumulated depreciation on the equipment of $15,000. Steve contributes $16,000 cash, $21,550 in merchandise inventory, $1,500 in Accounts Payable, and $17,500 in Vehicles with $2,750 in accumulated depreciation. Kathy and Steve agree that the equipment is currently worth $24,000, the vehicles are currently worth $12,000, and that merchandise inventory is worth $25,725.

How much cash should be in the cash account after forming the partnership?

2---What should show in the Merchandise Inventory account after forming the partnership?

3--After forming the Partnership Steve\'s Capital account should have $52,225.

In the previous month the Income was $12,650

How much TOTAL income does Kathy Receive?

5---What portion of the REMAINING income does Steve receive?

Solution

As per rules I will answer the first 4 subparts of the question

1:Cash = 16000+12,500 = $28500

2:Inventroy will be valued at the fair market value.

Inventory = $25,725.

3: Steves Capital Account will be

$16,000 cash

$25725 in merchandise inventory

$ 12000 in Vehicles

Less: $1,500 in Accounts Payable

Capital = $ 52225

Hence the statement is True

4: TOTAL income of Kathy = Salary + share in profit

=2400+12650*65%

=$10,622.50