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Wendy Reichstein and Sonia Datta operate separate auto repair shops. On January 15, 2021, they...

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Accounting

Wendy Reichstein and Sonia Datta operate separate auto repair shops. On January 15, 2021, they decided to combine their businesses, which had been operated as proprietorships, to form Wendy & Sonia Auto Repair, a partnership. Information from their separate balance sheets is presented below:

Wendy Auto Repair Sonia Auto Repair
Cash $8,100 $2,000
Accounts receivable 7,200 32,100
Allowance for doubtful accounts 800 1,500
Accounts payable 3,900 8,600
Notes payable - 15,000
Salaries payable - 1,100
Equipment 8,700 28,000
Accumulated depreciation - equipment 2,200 16,000

It is agreed that the expected realizable value of Wendy's accounts receivable is $4,700 and Sonia's receivables is $29,400. The fair market value of Wendy's equipment is $6,900 and Sonia's equipment is $9,100. It is further agreed that the new partnership will assume all liabilities of the proprietorships with the exception of the note payable on Sonia's balance sheet, which she will pay herself. Prepare the journal entries necessary to record the formation of the partnership

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