March 1, 20Y8, Eric Keene and Renee Wallace form a partnership. Keene agrees to invest $23,400 in cash and merchandise inventory valued at $62,600. Wallace invests certain business assets at valuations agreed upon, transfers business liabilities, and contributes sufficient cash to bring her total capital to $60,000. Details regarding the book values of the business assets and liabilities, and the agreed valuations, follow: Wallace's Ledger Balance Agreed-Upon Valuation Accounts Receivable $19900 $19500 Allowance for Doubtful Accounts 1200 1400 Equipment 83500 55400 Accumulated Depreciation - Equipment 29800 Accounts Payable
March 1, 20Y8, Eric Keene and Renee Wallace form a partnership. Keene agrees to invest $23,400 in cash and merchandise inventory valued at $62,600. Wallace invests certain business assets at valuations agreed upon, transfers business liabilities, and contributes sufficient cash to bring her total capital to $60,000. Details regarding the book values of the business assets and liabilities, and the agreed valuations, follow: Wallace's Ledger Balance Agreed-Upon Valuation Accounts Receivable $19900 $19500 Allowance for Doubtful Accounts 1200 1400 Equipment 83500 55400 Accumulated Depreciation - Equipment 29800 Accounts Payable
March 1, 20Y8, Eric Keene and Renee Wallace form a partnership. Keene agrees to invest $23,400 in cash and merchandise inventory valued at $62,600. Wallace invests certain business assets at valuations agreed upon, transfers business liabilities, and contributes sufficient cash to bring her total capital to $60,000. Details regarding the book values of the business assets and liabilities, and the agreed valuations, follow: Wallace's Ledger Balance Agreed-Upon Valuation Accounts Receivable $19900 $19500 Allowance for Doubtful Accounts 1200 1400 Equipment 83500 55400 Accumulated Depreciation - Equipment 29800 Accounts Payable
On March 1, 20Y8, Eric Keene and Renee Wallace form a partnership. Keene agrees to invest $23,400 in cash and merchandise inventory valued at $62,600. Wallace invests certain business assets at valuations agreed upon, transfers business liabilities, and contributes sufficient cash to bring her total capital to $60,000. Details regarding the book values of the business assets and liabilities, and the agreed valuations, follow:
Wallace's Ledger Balance
Agreed-Upon Valuation
Accounts Receivable
$19900
$19500
Allowance for Doubtful Accounts
1200
1400
Equipment
83500
55400
Accumulated Depreciation - Equipment
29800
Accounts Payable
15000
15000
Notes Payable (current)
37500
37500
The partnership agreement includes the following provisions regarding the division of net income: interest on original investments at 10%, salary allowances of $19,000 (Keene) and $24,000 (Wallace), and the remainder equally.
The journal entries AND balance for both Keene and Wallace are attached below.
After adjustments at February 28, 20Y9, the end of the first full year of operations, the revenues were $300,000 and expenses were $230,000, for a net income of $70,000. The drawing accounts have debit balances of $19,000 (Keene) and $24,000 (Wallace). Journalize the entries to close the revenues and expenses and the drawing accounts at February 28, 20Y9.
Transcribed Image Text:Balance Sheet:
Ceene& Wallae Co.
Balane Sheet
March 1,20Y8
Assels:
Current Asets:
$ 62400
19500
Cash
Accounts Receivable
Less : AFOA
Merchandie Inveutory
$1400
62660
Proverty, plant becauipmant
Equipment
Total Assets:
$ $5400 C?7
$198500
Ciabilifies & Capita 1:
cunent liabiliting ?
Acounts Payable
Notes poyable
Total liabilitres:
$1500
$ 3750 0
(4525 00)
Partuers equity:
Ceane , Capital)
Wallace, Capta l
Total partneró equity:
186 000
$60 000
(6146,000)
C61985 00)
Total liabilities &capital."
Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.
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