Trevor Smith contributed equipment, inventory, and $48,000 cash to a partnership. The equipment had a book value of $27,000 and a market value of $30,000. The inventory had a book value of $70,000, but only had a market value of $30,000, due to obsolescence. The partnership also assumed a $15,200 note payable owed by Smith that was used originally to purchase the equipment. Provide the journal entry for Smith's contribution to the partnership. If an amount box does not require an entry, leave it blank.

Dr Cash.48000

Dr Inventory 30,000

Dr Equipment 30,000

Cr Notes Payable 15,200

Cr Trevor Smith, Capital 92,800

Explanation:

Trevor Smith Journal entry

Dr Cash 48000

Dr Inventory 30,000

Dr Equipment 30,000

Cr Notes Payable 15,200

Cr Trevor Smith, Capital 92,800

(108,000-15,200)

The denominator (net annual cash flow) = $440,000

Explanation:

The denominator (net annual cash flow)

Particular                                 Amount

Saving in operating cost        $460,000

Less: Depreciation                 $360,000

Net additional income   $100,000

Income tax on above (20%)   $20,000

Savings after tax                   $80,000

Add: Depreciation                  $360,000

Net annual cash benefit   $440,000

The denominator (net annual cash flow) = $440,000