(a) The books of Corona will be retained by the partnership.

The following accounting procedures are used to record the formation of the partnership:
1. Adjust the assets and liabilities of Corona to their fair market values as agreed by the partners.
Adjustment are to be made to his capital account.
2. Record the investment of Virus.

Corona (now the partnership books):

1 Corona, Capital 1,300 Interest receivable

Merchandise Inventory 1,300 Accumulated depreciation
Office supplies
Allowance for bad debts 1,750 Allowance for bad debts
Corona, Capital 1,750 Corona, Capital
Merchandise inventory
Interest receivable 22.5 Interest payable
Corona, Capital 22.5 Furniture and fixture

Interest receivable 70
Corona, Capital 70

Corona, Capital 458.33

Interest payable 458.33

Accumulated depreciation 700

Corona, Capital 5,400
Furniture and Fixture 6,100

Office supplies 1,430

Corona, Capital 1,430

2 Cash 15,650
Virus, Capital 15,650

(b) A new set of books will be used.

The following accounting procedures may be used to record the formation of the partnership:
Books of Corona
1. Adjust the assets and liabilities of Corona according to the agreement. Adjustments are made to his capital accou
2. Close the books.
New books of the partnership
1. Record the investments of Corona and Virus.

Corona (Sole proprietorship books):

1
Corona, Capital 1,300 Interest receivable
Merchandise Inventory 1,300 Accumulated depreciation
Office supplies
 Allowance for bad debts 1,750 Allowance for bad debts
Corona, Capital 1,750 Corona, Capital
Merchandise inventory
Interest receivable 22.5 Interest payable
Corona, Capital 22.5 Furniture and fixture

Interest receivable 70
Corona, Capital 70

Corona, Capital 458.33

Interest payable 458.33

Accumulated depreciation 700

Corona, Capital 5,400
Furniture and Fixture 6,100

Office supplies 1,430

Corona, Capital 1,430

2 Allowance for bad debts 1,250

Notes payable 16,500
Interest payable 458.33
Accounts payable 5,500
Corona, Capital 27,414.17
Cash 7,000
Notes receivable 3,000
Interest receivable 92.5
Accounts receivable 25,000
Office supplies 1,430
Merchandise Inventory 7,700
Furniture and Fixture 6,900

New books of the partnership:

1 Cash 22,650
Notes receivable 3,000
Interest receivable 92.5
Accounts receivable 25,000
Office supplies 1,430
Merchandise Inventory 7,700
Furniture and Fixture 6,900
Allowance for bad debts 1,250
Notes payable 16,500
Interest payable 458.33
Accounts payable 5,500
Corona, Capital 27,414.17
Virus, Capital 15,650
 92.5
700
1,430
1,750
3,885.83
dise inventory 1,300
458.33
and fixture 6,100

made to his capital account.

92.5
700
1,430
 1,750
3,885.83
dise inventory 1,300
458.33
and fixture 6,100