Musa Moshref and Shaniqua Hollins have operated a successful firm for many years, sharing 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 $2,600 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 $77,000. • Equipment is to be valued at $155,500. b. Anderson is to purchase $70,600 of the ownership interest of Hollins for $75,000 cash and to contribute another $44,500 cash to the partnership for a total ownership equity of $115,100. 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 ACCOUNT TITLE DEBIT CREDIT 1 Cash 7,900.00 2 Accounts Receivable 42,900.00 3 Allowance for Doubtful Accounts 1,615.00 4 Merchandise Inventory 71,800.00 5 Prepaid Insurance 3,700.00 6 Equipment 179,600.00 7 Accumulated Depreciation-Equipment 42,700.00 8 Accounts Payable 20,300.00 9 Notes Payable (current) 35,500.00 10 Musa Moshref, Capital 119,785.00 11 Shaniqua Hollins, Capital 86,000.00 12 Totals 305,900.00 305,900.00 Required: 1. Journalize the entries as of June 30 to record the revaluations, using a temporary account entitled Asset Revaluations. 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. Refer to the Chart of Accounts for exact wording of account titles. 3. Present a balance sheet for the new partnership as of July 1, 20Y7. Refer to the information given and the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries.

Musa Moshref and Shaniqua Hollins have operated a successful firm for many years, sharing 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 $2,600 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 $77,000. • Equipment is to be valued at $155,500. b. Anderson is to purchase $70,600 of the ownership interest of Hollins for $75,000 cash and to contribute another $44,500 cash to the partnership for a total ownership equity of $115,100. 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 ACCOUNT TITLE DEBIT CREDIT 1 Cash 7,900.00 2 Accounts Receivable 42,900.00 3 Allowance for Doubtful Accounts 1,615.00 4 Merchandise Inventory 71,800.00 5 Prepaid Insurance 3,700.00 6 Equipment 179,600.00 7 Accumulated Depreciation-Equipment 42,700.00 8 Accounts Payable 20,300.00 9 Notes Payable (current) 35,500.00 10 Musa Moshref, Capital 119,785.00 11 Shaniqua Hollins, Capital 86,000.00 12 Totals 305,900.00 305,900.00 Required: 1. Journalize the entries as of June 30 to record the revaluations, using a temporary account entitled Asset Revaluations. 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. Refer to the Chart of Accounts for exact wording of account titles. 3. Present a balance sheet for the new partnership as of July 1, 20Y7. Refer to the information given and the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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 $2,600 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 $77,000.
•	Equipment is to be valued at $155,500.

Anderson is to purchase $70,600 of the ownership interest of Hollins for $75,000 cash and to contribute another $44,500 cash to the partnership for a total ownership equity of $115,100.

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

	ACCOUNT TITLE	DEBIT	CREDIT
1	Cash	7,900.00
2	Accounts Receivable	42,900.00
3	Allowance for Doubtful Accounts		1,615.00
4	Merchandise Inventory	71,800.00
5	Prepaid Insurance	3,700.00
6	Equipment	179,600.00
7	Accumulated Depreciation-Equipment		42,700.00
8	Accounts Payable		20,300.00
9	Notes Payable (current)		35,500.00
10	Musa Moshref, Capital		119,785.00
11	Shaniqua Hollins, Capital		86,000.00
12	Totals	305,900.00	305,900.00

	Required:
1.	Journalize the entries as of June 30 to record the revaluations, using a temporary account entitled Asset Revaluations. 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. Refer to the Chart of Accounts for exact wording of account titles.
3.	Present a balance sheet for the new partnership as of July 1, 20Y7. Refer to the information given and the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries.

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