Basic Partnership Accounting

Basic Partnership Accounting - Basic Partnership Accounting...

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Basic Partnership Accounting We now turn to the basic accounting for partnerships. The major accounting issues relate to forming the partnership, dividing income or loss, and preparing financial statements. FORMING A PARTNERSHIP Each partner’s initial investment in a partnership is entered in the partnership records. These investments should be recorded at the fair value of the assets at the date of their transfer to the partnership . The values assigned must be agreed to by all of the partners. To illustrate, assume that A. Rolfe and T. Shea combine their proprietorships to start a partnership named U.S. Software. The firm will specialize in developing financial modeling software packages. Rolfe and Shea have the following assets prior to the formation of the partnership. The entries to record the investments are: Investment of A. Rolfe Cash 8,000 Office Equipment 4,000 A. Rolfe, Capital 12,000 (To record investment of Rolfe) Investment of T. Shea Cash 9,000 Accounts Receivable 4,000
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Basic Partnership Accounting - Basic Partnership Accounting...

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