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 $19,900 $19,500 Allowance for Doubtful Accounts 1,200 83,5001 29,800 15,000 37,500 1,400 Equipment Accumulated Depreciation-Equipment Accounts Payable Notes Payable (current) 55,400 15,000 37,500 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. Instructions 1. Journalize the entries to record the investments of Keene and Wallace in the partner- ship accounts. 2. Prepare a balance sheet as of March 1, 20Y8, the date of formation of the partnership of Keene and Wallace. 3. 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.
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 $19,900 $19,500 Allowance for Doubtful Accounts 1,200 83,5001 29,800 15,000 37,500 1,400 Equipment Accumulated Depreciation-Equipment Accounts Payable Notes Payable (current) 55,400 15,000 37,500 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. Instructions 1. Journalize the entries to record the investments of Keene and Wallace in the partner- ship accounts. 2. Prepare a balance sheet as of March 1, 20Y8, the date of formation of the partnership of Keene and Wallace. 3. 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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
$19,900
$19,500
Allowance for Doubtful Accounts
1,200
83,5001
29,800
15,000
37,500
1,400
Equipment
Accumulated Depreciation-Equipment
Accounts Payable
Notes Payable (current)
55,400
15,000
37,500
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.
Instructions
1. Journalize the entries to record the investments of Keene and Wallace in the partner-
ship accounts.
2. Prepare a balance sheet as of March 1, 20Y8, the date of formation of the partnership
of Keene and Wallace.
3. 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.
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