dger Balance Agreed Valuation Accounts Receivable $20,750 $19,500 Allowance for Doubtful Accounts 950 800 Equipment 79,100}
On May 1 of the current year, Anna Austin and Dave Walls form a partnership. Austin agrees to
invest $10,500 in cash and merchandise inventory valued at $39,500. Walls invests certain
business assets at valuations agreed upon, transfers business liabilities, and contributes sufficient
cash to bring his total capital to $40,000. Details regarding the book values of the business
assets and liabilities, and the agreed valuations, follow:
|
|
Wall’s Ledger Balance |
Agreed Valuation |
|
|
$20,750 |
$19,500 |
|
Allowance for Doubtful Accounts |
950 |
800 |
|
Equipment |
79,100} |
45,000 |
|
|
35,200} |
|
|
Accounts Payable |
14,000 |
14,000 |
|
Notes Payable |
15,000 |
15,000 |
(See Image)
Required:
3. After adjustments and the closing of revenue and expense accounts at April 30. the end of the first full year of operations, the income summary account has a credit balance of $68,000, and the drawing accounts have debit balances of $20,000 (Austin) and $26,000 (Walls).
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