Ron Marden and Tip Baker operate separate auto repair shops. On January 1 2017 they decide to combine their separate businesses which were operated as proprietorships to form M & B Auto Repair a partnership. Information from their separate balance sheets is presented below:

\begin{array} { l c c } & \text { Marden Auto Repair } & \text { Baker Auto Repair } \\\text { Cash } & \$ 10,000 & \$ 14,000 \\\text { Accounts receivable } & 12,000 & 10,000 \\\text { Allowance for doubtful accounts } & 1,000 & 500 \\\text { Accounts payable } & 5,000 & 6,000 \\\text { Notes payable } & - & 3,000 \\\text { Salaries and wages payable } & 1,000 & 1,500 \\\text { Equipment } & 12,000 & 24,000 \\\text { Accumulated depreciation—equipment } & 2,000 & 4,000\end{array}

It is agreed that the expected realizable value of Marden's accounts receivable is $11000 and Baker's receivables is $7000. The fair value of Marden's equipment is $13000 and the value of Baker's equipment is $20000. It is further agreed that the new partnership will assume all liabilities of the proprietorships with the exception of the notes payable on Baker's balance sheet which he will pay himself.
Instructions
Prepare the journal entries necessary to record the formation of the partnership.

A Bonus to a New Partner

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