On October 1, 20Y8, Jacinto Suarez and Tricia Fritz form a partnership. Suarez agrees to invest $20,890 in cash and inventory valued at $56,320. Fritz invests certain business assets at valuations agreed upon, transfers business liabilities, and contributes sufficient cash to bring Fritz's total capital to $59,510. Details regarding the book values of the business assets and liabilities, and the agreed valuations, follow: Accounts Receivable Allowance for Doubtful Accounts Equipment Accumulated Depreciation-Equipment Accounts Payable Notes Payable (current) Fritz's Ledger Balance $19,150 1,140 83,410 29,490 14,740 35,850 Agreed-Upon Valuation $18,230 1,500 55,190 14,740 35,850 The partnership agreement includes the following provisions regarding the division of net income: interest on original investments at 10%, salary allowances of $22,150 (Suarez) and $30,150 (Fritz), and the remainder equally. Required: 1. Journalize the entries to record the investments of Suarez and Fritz in the partnership accounts. 2. Prepare a balance sheet as of October 1, 20Y8, the date of formation of the partnership of Suarez and Fritz. 3. After adjustments at September 30, 20Y9, the end of the first full year of operations, the revenues were $295,870 and expenses were $205,400, for a net income of $90,470. The drawing accounts have debit balances of $27,820 (Suarez) and $30,550 (Fritz). Journalize the entries to close the revenues and expenses and the drawing accounts at September 30, 20Y9.
On October 1, 20Y8, Jacinto Suarez and Tricia Fritz form a partnership. Suarez agrees to invest $20,890 in cash and inventory valued at $56,320. Fritz invests certain business assets at valuations agreed upon, transfers business liabilities, and contributes sufficient cash to bring Fritz's total capital to $59,510. Details regarding the book values of the business assets and liabilities, and the agreed valuations, follow: Accounts Receivable Allowance for Doubtful Accounts Equipment Accumulated Depreciation-Equipment Accounts Payable Notes Payable (current) Fritz's Ledger Balance $19,150 1,140 83,410 29,490 14,740 35,850 Agreed-Upon Valuation $18,230 1,500 55,190 14,740 35,850 The partnership agreement includes the following provisions regarding the division of net income: interest on original investments at 10%, salary allowances of $22,150 (Suarez) and $30,150 (Fritz), and the remainder equally. Required: 1. Journalize the entries to record the investments of Suarez and Fritz in the partnership accounts. 2. Prepare a balance sheet as of October 1, 20Y8, the date of formation of the partnership of Suarez and Fritz. 3. After adjustments at September 30, 20Y9, the end of the first full year of operations, the revenues were $295,870 and expenses were $205,400, for a net income of $90,470. The drawing accounts have debit balances of $27,820 (Suarez) and $30,550 (Fritz). Journalize the entries to close the revenues and expenses and the drawing accounts at September 30, 20Y9.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On October 1, 20Y8, Jacinto Suarez and Tricia Fritz form a partnership. Suarez agrees to invest $20,890 in cash and inventory valued at $56,320. Fritz invests certain business assets at valuations agreed upon, transfers
business liabilities, and contributes sufficient cash to bring Fritz's total capital to $59,510. Details regarding the book values of the business assets and liabilities, and the agreed valuations, follow:
Accounts Receivable
Allowance for Doubtful Accounts
Equipment
Accumulated Depreciation-Equipment
Accounts Payable
Notes Payable (current)
Fritz's Ledger
Balance
$19,150
1,140
83,410
29,490
14,740
35,850
Agreed-Upon
Valuation
$18,230
1,500
55,190
14,740
35,850
The partnership agreement includes the following provisions regarding the division of net income: interest on original investments at 10%, salary allowances of $22,150 (Suarez) and $30,150 (Fritz), and the remainder equally.
Required:
1. Journalize the entries to record the investments of Suarez and Fritz in the partnership accounts.
2. Prepare a balance sheet as of October 1, 20Y8, the date of formation of the partnership of Suarez and Fritz.
3. After adjustments at September 30, 20Y9, the end of the first full year of operations, the revenues were $295,870 and expenses were
$205,400, for a net income of $90,470. The drawing accounts have debit balances of $27,820 (Suarez) and $30,550 (Fritz). Journalize the
entries to close the revenues and expenses and the drawing accounts at September 30, 20Y9.
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