On 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 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 $290,170 and expenses were $200,100, for a net income of $90,070. The drawing accounts have debit balances of $28,170 (Keene) and $30,200 (Wallace). Journalize the entries to close the revenues and expenses and the drawing accounts at February 28, 20Y9.* *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 journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.

On 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 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 $290,170 and expenses were $200,100, for a net income of $90,070. The drawing accounts have debit balances of $28,170 (Keene) and $30,200 (Wallace). Journalize the entries to close the revenues and expenses and the drawing accounts at February 28, 20Y9.* *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 journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter12: Accounting For Partnerships And Limited Liability Companies

Section: Chapter Questions

Problem 4PB

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Question

	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:

Journalize the entries on March 1 to record the investments of Keene and Wallacein the partnership accounts.*

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.

After adjustments at February 28, 20Y9, the end of the first full year of operations, the revenues were $290,170 and expenses were $200,100, for a net income of $90,070. The drawing accounts have debit balances of $28,170 (Keene) and $30,200 (Wallace). Journalize the entries to close the revenues and expenses and the drawing accounts at February 28, 20Y9.*

*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 journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.

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