On March 1, 20Y8, Eric Keene and Renee Wallace form a partnership. Keene agrees to invest $20,630 in cash and merchandise inventory valued at $55,950. Wallace invests certain business assets at valuations agreed upon, transfers business liabilities, and contributes sufficient cash to bring her total capital to $59,960. Details regarding the book values of the business assets and liabilities, and the agreed valuations, follow: Wallace’s Ledger Agreed-Upon Balance Valuation Accounts Receivable $19,040 $18,210 Allowance for Doubtful Accounts 910 1,130 Equipment 83,040 54,480 Accumulated Depreciation 29,670 – Accounts Payable 15,380 15,380 Notes Payable (current) 35,940 35,940 The partnership agreement includes the following provisions regarding the division of net income: interest on original investments at 10%, salary allowances of $22,040 (Keene) and $30,510 (Wallace), and the remainder equally. Required: 1. Journalize the entries on March 1 to record the investments of Keene and Wallacein the partnership accounts. 2. Prepare a balance sheet as of March 1, 20Y8, the date of formation of the partnership of Keene and Wallace. Be sure to complete the statement heading. Refer to the Chart of Accounts and the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. Enter current assets in order of liquidity. “Less”, “Add”, or colons (:) will automatically appear if required. Enter all amounts as positive numbers. 3. After adjustments at February 28, 20Y9, the end of the first full year of operations, the revenues were $290,120 and expenses were $200,500, for a net income of $89,620. The drawing accounts have debit balances of $27,630 (Keene) and $30,450 (Wallace). Journalizethe entries to close the revenues and expenses and the drawing accounts at February 28, 20Y9.

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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On March 1, 20Y8, Eric Keene and Renee Wallace form a partnership. Keene agrees to invest $20,630 in cash and merchandise inventory valued at $55,950. Wallace invests certain business assets at valuations agreed upon, transfers business liabilities, and contributes sufficient cash to bring her total capital to $59,960. Details regarding the book values of the business assets and liabilities, and the agreed valuations, follow:

	Wallace’s Ledger	Agreed-Upon
Balance	Valuation
Accounts Receivable	$19,040	$18,210
Allowance for Doubtful Accounts	910	1,130
Equipment	83,040	54,480
Accumulated Depreciation	29,670	–
Accounts Payable	15,380	15,380
Notes Payable (current)	35,940	35,940

The partnership agreement includes the following provisions regarding the division of net income: interest on original investments at 10%, salary allowances of $22,040 (Keene) and $30,510 (Wallace), and the remainder equally.

	Required:
1.	Journalize the entries on March 1 to record the investments of Keene and Wallacein the partnership accounts.
2.	Prepare a balance sheet as of March 1, 20Y8, the date of formation of the partnership of Keene and Wallace. Be sure to complete the statement heading. Refer to the Chart of Accounts and the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. Enter current assets in order of liquidity. “Less”, “Add”, or colons (:) will automatically appear if required. Enter all amounts as positive numbers.
3.	After adjustments at February 28, 20Y9, the end of the first full year of operations, the revenues were $290,120 and expenses were $200,500, for a net income of $89,620. The drawing accounts have debit balances of $27,630 (Keene) and $30,450 (Wallace). Journalizethe entries to close the revenues and expenses and the drawing accounts at February 28, 20Y9.

1. Journalize me entries on arch 1 to record the investments of Keene and Wallacein the partnershp accounts. Refer to the chart of accounts for the exact wordling of tme account tees. CNOWjoumals do not use lines for joumal explanations Every ine on a journal page is used for debt or creait entries
AGE S
JOURNAL
ACCOUNTING CQUATION
POSI. REF.
ASSETS LIABLITIES
DALE
DESCRPTION
EQUITY
S Ater aqustments at February 26, 20YO, the end of tme frst tu year of operations, the revenues were $200, 120 and expenses were $200,500, for a net income of S50, 020. The drawing accounts have debit balances of $27,030 (Keene) and S30, 450 (Walace). Journalizeme entries to close the revenues and expenses and tne drawing accounts at February 28, 20YD. Refer to the chart of accounts for the exact wording of me account swes. CNOWjoumals ob not
use ines for journal explanations. Every ine on a jourmal page is used for debit or credit entries.
PAGE 20
JOURNAL
ACCOUNTING EQUATION
DAIE
DESCRPTION
POST. REF.
DEBIT
ASSETS
LIABLIIES
EQUITY
Closing Entries

Keene and Wallace
Balance Sheet
(Label)
Assets
1 (Label)
4
a (Label)
10
11
Liabilities
12 (Label)
13
14
15
Partners' Equity
16
17
18
19
20

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