Financial Accounting
14th Edition
ISBN: 9781305088436
Author: Carl Warren, Jim Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 12, Problem 1PA
1.
To determine
Record the
2.
To determine
Prepare the
3.
To determine
Provide the journal entries to close the Income summary and expenses and drawing accounts at February 28, 2017.
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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 in the image below.
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
Journalize the entries to record the investments of Keene and Wallace in the partnership accounts.
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 in the image below.
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.
The journal entries for both Keene and Wallace are also attached below.
Prepare a balance sheet as of March 1, 20Y8, the date of formation of the partnership of Keene and Wallace.
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…
Chapter 12 Solutions
Financial Accounting
Ch. 12 - Prob. 1DQCh. 12 - Prob. 2DQCh. 12 - Prob. 3DQCh. 12 - Prob. 4DQCh. 12 - Prob. 5DQCh. 12 - Prob. 6DQCh. 12 - Prob. 7DQCh. 12 - Prob. 8DQCh. 12 - Prob. 9DQCh. 12 - Prob. 10DQ
Ch. 12 - Prob. 1PEACh. 12 - Prob. 1PEBCh. 12 - Prob. 2PEACh. 12 - Prob. 2PEBCh. 12 - Prob. 3PEACh. 12 - Prob. 3PEBCh. 12 - Prob. 4PEACh. 12 - Prob. 4PEBCh. 12 - Prior to liquidating their partnership, Parker and...Ch. 12 - Liquidating partnerships Prior to liquidating...Ch. 12 - Prob. 6PEACh. 12 - Prob. 6PEBCh. 12 - Prob. 7PEACh. 12 - Eclipse Architects earned 1,800,000 during 2016...Ch. 12 - Prob. 1ECh. 12 - Prob. 2ECh. 12 - Prob. 3ECh. 12 - Prob. 4ECh. 12 - Prob. 5ECh. 12 - Prob. 6ECh. 12 - Prob. 7ECh. 12 - Marvel Media, LLC, has three members: WLKT...Ch. 12 - Prob. 9ECh. 12 - Prob. 10ECh. 12 - Prob. 11ECh. 12 - Prob. 12ECh. 12 - Prob. 13ECh. 12 - Prob. 14ECh. 12 - Prob. 15ECh. 12 - Prob. 16ECh. 12 - Prob. 17ECh. 12 - The statement of members equity for Bonanza, LLC,...Ch. 12 - Distribution of cash upon liquidation Hewitt and...Ch. 12 - Distribution of cash upon liquidation David Oliver...Ch. 12 - Liquidating partnershipscapital deficiency Lewis,...Ch. 12 - Prob. 22ECh. 12 - Prob. 23ECh. 12 - Statement of partnership liquidation After closing...Ch. 12 - Prob. 25ECh. 12 - Prob. 26ECh. 12 - The accounting firm of Deloitte Touche is the...Ch. 12 - Prob. 28ECh. 12 - Prob. 1PACh. 12 - Prob. 2PACh. 12 - Prob. 3PACh. 12 - Prob. 4PACh. 12 - Statement of partnership liquidation After the...Ch. 12 - Prob. 6PACh. 12 - Prob. 1PBCh. 12 - Prob. 2PBCh. 12 - Prob. 3PBCh. 12 - Prob. 4PBCh. 12 - Statement of partnership liquidation After the...Ch. 12 - On August 3, the firm of Chapelle, Rock, and Pryor...Ch. 12 - Prob. 1CPCh. 12 - Prob. 2CPCh. 12 - Prob. 3CPCh. 12 - Prob. 4CP
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- On February 3, 2016 Sam Singh invested $90,000 cash for a 1/3 interest in a newly formed partnership. Prepare the journal entry to record the transaction.arrow_forwardOn March 1, 20Y8, Eric Keene and Renee Wallace form a partnership. Keene agrees to invest $20,960 in cash and merchandise inventory valued at $56,060. Wallace invests certain business assets at valuations agreed upon, transfers business liabilities, and contributes sufficient cash to bring her total capital to $59,510. 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 $18,460 $17,560 Allowance for Doubtful Accounts 1,570 1,810 Equipment 83,160 54,420 Accumulated Depreciation 29,820 – Accounts Payable 15,330 15,330 Notes Payable (current) 36,100 36,100 The partnership agreement includes the following provisions regarding the division of net income: interest on original investments at 10%, salary allowances of $22,140 (Keene) and $30,840 (Wallace), and the remainder equally. Required: 1. Journalize the…arrow_forwardOn March 1, 20Y8, Eric Keene and Renee Wallace form a partnership. Keene agrees to invest $20,960 in cash and merchandise inventory valued at $56,060. Wallace invests certain business assets at valuations agreed upon, transfers business liabilities, and contributes sufficient cash to bring her total capital to $59,510. 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 $18,460 $17,560 Allowance for Doubtful Accounts 1,570 1,810 Equipment 83,160 54,420 Accumulated Depreciation 29,820 – Accounts Payable 15,330 15,330 Notes Payable (current) 36,100 36,100 1. Journalize the entries on March 1 to record the investments of Keene and Wallacein the partnership accounts. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a…arrow_forward
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