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Nemecia Marcello and Lee Castro decide to form a partnership by combining the assets of their separate businesses. Marcello contributes the following assets to the partnership: cash, $23,820; accounts receivable with a face amount of $154,070 and an allowance for doubtful accounts of $3,930; inventory with a cost of $88,010; and equipment with a cost of $123,640 and accumulated depreciation of $48,490. The partners agree that $5,890 of the accounts receivable are completely worthless and are not to be accepted by the partnership, that $5,120 is a reasonable allowance for the uncollectibility of the remaining accounts, that the inventory is to be recorded at the current market price of $100,740, and that the equipment is to be valued at $80,180.

On December 1, journalize the partnership's entry to record Marcello's investment.

CHART OF ACCOUNTS Nemecia Marcello and Lee Castro General Ledger

ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable 113 Allowance for Doubtful Accounts 114 Interest Receivable 115 Notes Receivable 116 Inventory 117 Office Supplies 118 Store Supplies 119 Prepaid Insurance 120 Land 123 Equipment 124 Accumulated Depreciation-Equipment 129 Asset Revaluations 133 Patent

LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable

EQUITY 310 Nemecia Marcello, Capital 311 Nemecia Marcello, Drawing 312 Lee Castro, Capital 313 Lee Castro, Drawing

REVENUE 410 Sales 610 Interest Revenue

EXPENSES 510 Cost of Goods Sold 520 Salaries Expense 521 Advertising Expense 522 Depreciation Expense-Equipment 523 Delivery Expense 524 Repairs Expense 529 Selling Expenses 531 Rent Expense 533 Insurance Expense 534 Office Supplies Expense 535 Store Supplies Expense 536 Credit Card Expense 537 Cash Short and Over 538 Bad Debt Expense 539 Miscellaneous Expense 710 Interest Expense

CHART OF ACCOUNTS Nemecia Marcello and Lee Castro General Ledger ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable 113 Allowance for Doubtful Accounts 114 Interest Receivable 115 Notes Receivable 116 Inventory 117 Office Supplies 118 Store Supplies 119 Prepaid Insurance 120 Land 123 Equipment 124 Accumulated Depreciation-Equipment 129 Asset Revaluations 133 Patent REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Goods Sold 520 Salaries Expense 521 Advertising Expense 522 Depreciation Expense-Equipment 523 Delivery Expense 524 Repairs Expense 529 Selling Expenses 531 Rent Expense 533 Insurance Expense 534 Office Supplies Expense 535 Store Supplies Expense 118 Store Supplies 119 Prepaid Insurance 120 Land 123 Equipment 124 Accumulated Depreciation-Equipment 129 Asset Revaluations 133 Patent LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable 523 Delivery Expense 524 Repairs Expense 529 Selling Expenses 531 Rent Expense 533 Insurance Expense 534 Office Supplies Expense 535 Store Supplies Expense 536 Credit Card Expense 537 Cash Short and Over 538 Bad Debt Expense 539 Miscellaneous Expense 710 Interest Expense EQUITY 310 Nemecia Marcello, Capital 311 Nemecia Marcello, Drawing 312 Lee Castro, Capital 313 Lee Castro, Drawing

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