Question

Journalizing Partner's Original Investment Austin Fisher contributed land, inventory, and $34,000 cash to a partnership. The land had a book value of $84,000 and a market value of $162,000. The inventory had a book value of $67,600 and a market value of $62,900. The partnership also assumed a $60,000 note payable owed by Fisher that was used originally to purchase the land.

Provide the journal entry for Fisher's contribution to the partnership.

Answer 1

Austin's capital:

= Market value of land + Market value of inventory + Cash - Notes payable

= $162,000 + $62,900 + $34,000 - $60,000

= $198,900

Therefore, the journal entry is as follows:

Land A/c Dr. $162,000

Inventory A/c Dr. $62,900

Cash A/c Dr. $34,000

To notes payable $60,000

To Austin's capital $198,900

(To record the contribution of Fisher to the partnership)