close solutoin list

Entries and balance sheet for partnership On March 1, 20Y8, Eric Keene and Renee Wallace form a partnership. Keene agrees to invest 523.400 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 1,400 Equipment 83,S00 55,400 Accumulated Depreciation—Equipment 29,800 55,400 Accounts Payable 15,000 15,000 Notes Payable (current) 37,500 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 partnership 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.

BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094
BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

Solutions

Chapter
Section
Chapter 12, Problem 12.1APR
Textbook Problem

Entries and balance sheet for partnership

On March 1, 20Y8, Eric Keene and Renee Wallace form a partnership. Keene agrees to invest 523.400 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 1,400
Equipment 83,S00 55,400
Accumulated Depreciation—Equipment 29,800 55,400
Accounts Payable 15,000 15,000
Notes Payable (current) 37,500 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. 1. Journalize the entries to record the investments of Keene and Wallace in the partnership accounts.
  2. 2. Prepare a balance sheet as of March 1, 20Y8, the date of formation of the partnership of Keene and Wallace.
  3. 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.

Expert Solution

1.

To determine

Partnership

It is that form of organization which is owned and managed by two or more persons who invest and share the profits and losses according to a pre-determined ratio.

Forming a Partnership

While forming the partnership, the contribution of assets by partners are debited to the partnership assets account; whereas the liabilities of the partnerships are credited to the partnership’s liabilities account, and the net amount of the investments of partners are credited to the partners’ individual capital account.

To record:  The journal entry for K and W’s investment in the partnership.

Explanation of Solution

Cash and Merchandise inventory are assets of partnership and have increased it. So, these items are debited. K’s capital is a component of owners’ equity and it increases it. So, it has been credited.

In partnership, the non-cash assets are recorded at agreed value by the partners. The book value of accounts receivable was 19,900; but the agreed value of land was 19,500...

Expert Solution

2.

To determine

To prepare: The balance sheet on March 1, 20Y8, on the date of formation of partnership.

Expert Solution

3.

To determine

To provide: The journal entries to close the revenues and expenses and drawing accounts at February 28, 20Y9.

Want to see this answer and more?

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

See solution

Chapter 12 Solutions

Accounting
Show all chapter solutions
Ch. 12 - Journalizing partners original investment Holly...Ch. 12 - Journalizing partners original investment Austin...Ch. 12 - Dividing partnership net income Lia Chen and...Ch. 12 - Dividing partnership net income John Prado and...Ch. 12 - Revaluing and contributing assets to a partnership...Ch. 12 - Revaluing and contributing assets to a partnership...Ch. 12 - Partner bonus Gomez, has a capital balance of...Ch. 12 - Partner bonus Hiro has a capital balance of 75,000...Ch. 12 - Liquidating partnerships Prior to liquidating...Ch. 12 - Liquidating partnerships Prior to liquidating...Ch. 12 - Liquidating partnershipsdeficiency Prior to...Ch. 12 - Liquidating partnershipsdeficiency Prior to...Ch. 12 - Revenue per employee Niles and Cohen, CPAs earned ...Ch. 12 - Revenue per employee Eclipse Architects earned...Ch. 12 - Recording partner's original investment Kimberly...Ch. 12 - Recording partner's original investment Hannah...Ch. 12 - Dividing partnership income Tyler Hawes and Piper...Ch. 12 - Dividing partnership income Using each of the live...Ch. 12 - Dividing partnership net loss Leigh Meadows and...Ch. 12 - Negotiating income-sharing ratio Sixty-year-old...Ch. 12 - Dividing LLC income Martin Farley and Ashley Clark...Ch. 12 - LLC net income and statement of members equity...Ch. 12 - Admitting new partners Myles Eller and Crystal...Ch. 12 - Admitting new partners who buy an interest and...Ch. 12 - Admitting new partner who contributes assets After...Ch. 12 - Admitting new partner with bonus Cody Jenkins and...Ch. 12 - Admitting a new LLC member with bonus Alert...Ch. 12 - Admitting new partner with bonus L. Bowers and V....Ch. 12 - Partner bonuses, statement of partnership equity...Ch. 12 - Withdrawal of partner Lane Stevens is to retire...Ch. 12 - Statement of members' equity, admitting new member...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 - Distribution of cash upon liquidation Bray,...Ch. 12 - Liquidating partnershipscapital deficiency...Ch. 12 - Statement of partnership liquidation After closing...Ch. 12 - Statement of LLC liquidation Lester, Torres, and...Ch. 12 - Partnership entries and statement of partnership...Ch. 12 - Revenue per professional staff The accounting firm...Ch. 12 - Revenue per employee Superior Cleaning Services,...Ch. 12 - Entries and balance sheet for partnership On March...Ch. 12 - Dividing partnership income Morrison and Greene...Ch. 12 - Financial statements for partnership The ledger of...Ch. 12 - Admitting new partner Musa Moshref and Shaniqua...Ch. 12 - Statement of partnership liquidation After the...Ch. 12 - Statement of partnership liquidation On November...Ch. 12 - Entries and balance sheet for partnership On April...Ch. 12 - Dividing partnership income Dylan Howell and...Ch. 12 - Financial statements for partnerships The ledger...Ch. 12 - Admitting new partner Brian Caldwell and Adriana...Ch. 12 - Statement of partnership liquidation After the...Ch. 12 - Statement of partnership liquidation On August 3,...Ch. 12 - Ethics in Action Tayc Barrow, M.D., and James...Ch. 12 - Communication Lindsey Wilson has agreed to invest...Ch. 12 - Dividing partnership income Terry Willard and...

Additional Business Textbook Solutions

Find more solutions based on key concepts
Show solutions
Should an economic model describe reality exactly?

Principles of Microeconomics (MindTap Course List)

LO2 When posting adjusting entries to the general ledger, what is written in the Item column?

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)

Executive salaries have been shown to be more closely correlated to the size of the firm than to its profitabil...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

Explain the difference between resource spending and resource usage.

Cornerstones of Cost Management (Cornerstones Series)