Musa Moshref and Shaniqua Hollins have operated a successful firm for many years, shar- ing net income and net losses equally. Taylor Anderson is to be admitted to the partnership on July 1 of the current year, in accordance with the following agreement: a. Assets and liabilities of the old partnership are to be valued at their book values as of June 30, except for the following: Accounts receivable amounting to $2,500 are to be written off, and the allowance for doubtful accounts is to be increased to 5% of the remaining accounts. • Merchandise inventory is to be valued at $76,600. Equipment is to be valued at $155,700. b. Anderson is to purchase $70,000 of the ownership interest of Hollins for $75,000 cash and to contribute another $45,000 cash to the partnership for a total ownership equity of $115,000. The post-closing trial balance of Moshref and Hollins as of June 30 is as follows: Moshref and Hollins Post-Closing Trial Balance June 30, 20Y7 Debit Balances Credit Balances Cash 8,000 Accounts Receivable 42,500 Allowance for Doubtful Accounts 1,600 Merchandise Inventory 72,000 Prepaid Insurance Equipment Accumulated Depreciation-Equipment 3,000 180,500 43,100 Accounts Payable Notes Payable (current) Musa Moshref, Capital Shaniqua Hollins, Capital 21,300 35,000 120,000 85,000 306,000 306,000 Instructions 1. Journalize the entries as of June 30 to record the revaluations, using a temporary account entitled Asset Revaluations. Debits and credits to the Asset Revaluation account are losses and gains from revaluation, respectively. The balance in the accumulated depreciation account is to be eliminated. After journalizing the revaluations, close the balance of the asset revaluations account to the capital accounts of Musa Moshref and Shaniqua Hollins. 2. Journalize the additional entries to record Anderson's entrance to the partnership on July 1, 20Y7. 3. Present a balance sheet for the new partnership as of July 1, 20Y7.
Musa Moshref and Shaniqua Hollins have operated a successful firm for many years, shar- ing net income and net losses equally. Taylor Anderson is to be admitted to the partnership on July 1 of the current year, in accordance with the following agreement: a. Assets and liabilities of the old partnership are to be valued at their book values as of June 30, except for the following: Accounts receivable amounting to $2,500 are to be written off, and the allowance for doubtful accounts is to be increased to 5% of the remaining accounts. • Merchandise inventory is to be valued at $76,600. Equipment is to be valued at $155,700. b. Anderson is to purchase $70,000 of the ownership interest of Hollins for $75,000 cash and to contribute another $45,000 cash to the partnership for a total ownership equity of $115,000. The post-closing trial balance of Moshref and Hollins as of June 30 is as follows: Moshref and Hollins Post-Closing Trial Balance June 30, 20Y7 Debit Balances Credit Balances Cash 8,000 Accounts Receivable 42,500 Allowance for Doubtful Accounts 1,600 Merchandise Inventory 72,000 Prepaid Insurance Equipment Accumulated Depreciation-Equipment 3,000 180,500 43,100 Accounts Payable Notes Payable (current) Musa Moshref, Capital Shaniqua Hollins, Capital 21,300 35,000 120,000 85,000 306,000 306,000 Instructions 1. Journalize the entries as of June 30 to record the revaluations, using a temporary account entitled Asset Revaluations. Debits and credits to the Asset Revaluation account are losses and gains from revaluation, respectively. The balance in the accumulated depreciation account is to be eliminated. After journalizing the revaluations, close the balance of the asset revaluations account to the capital accounts of Musa Moshref and Shaniqua Hollins. 2. Journalize the additional entries to record Anderson's entrance to the partnership on July 1, 20Y7. 3. Present a balance sheet for the new partnership as of July 1, 20Y7.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Musa Moshref and Shaniqua Hollins have operated a successful firm for many years, shar-
ing net income and net losses equally. Taylor Anderson is to be admitted to the partnership
on July 1 of the current year, in accordance with the following agreement:
a. Assets and liabilities of the old partnership are to be valued at their book values as
of June 30, except for the following:
Accounts receivable amounting to $2,500 are to be written off, and the allowance
for doubtful accounts is to be increased to 5% of the remaining accounts.
• Merchandise inventory is to be valued at $76,600.
Equipment is to be valued at $155,700.
b. Anderson is to purchase $70,000 of the ownership interest of Hollins for $75,000 cash and to
contribute another $45,000 cash to the partnership for a total ownership equity of $115,000.
The post-closing trial balance of Moshref and Hollins as of June 30 is as follows:
Moshref and Hollins
Post-Closing Trial Balance
June 30, 20Y7
Debit
Balances
Credit
Balances
Cash
8,000
Accounts Receivable
42,500
Allowance for Doubtful Accounts
1,600
Merchandise Inventory
72,000
Prepaid Insurance
Equipment
Accumulated Depreciation-Equipment
3,000
180,500
43,100
Accounts Payable
Notes Payable (current)
Musa Moshref, Capital
Shaniqua Hollins, Capital
21,300
35,000
120,000
85,000
306,000
306,000
Instructions
1. Journalize the entries as of June 30 to record the revaluations, using a temporary account
entitled Asset Revaluations. Debits and credits to the Asset Revaluation account are losses
and gains from revaluation, respectively. The balance in the accumulated depreciation
account is to be eliminated. After journalizing the revaluations, close the balance of the
asset revaluations account to the capital accounts of Musa Moshref and Shaniqua Hollins.
2. Journalize the additional entries to record Anderson's entrance to the partnership on
July 1, 20Y7.
3. Present a balance sheet for the new partnership as of July 1, 20Y7.
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