On October 1, 20Y8, Jacinto Suarez and Tricia Fritz form a partnership. Suarez agrees to invest...

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On October 1, 20Y8, Jacinto Suarez and Tricia Fritz form a partnership. Suarez agrees to invest $25,000 in cash and inventory valued at $60,000. Fritz invests certain business assets at valuations agreed upon, transfers business liabilities, and contributes sufficient cash to bring Fritz's total capital to $100,000. 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 $44,000 5,000 180,000 115,000 18,500 30,000 Agreed-Upon Valuation $40,000 2,500 90,000 18,500 30,000 The partnership agreement includes the following provisions regarding the division of net income: interest on original investments at 8%, salary allowances of $45,000 (Suarez) and $60,000 (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 $675,000 and expenses were $415,000, for a net income of $260,000. The drawing accounts have debit balances of $45,000 (Suarez) and $60,000 (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 $25,000 in cash and inventory valued at $60,000. Fritz invests certain business assets at valuations agreed upon, transfers business liabilities, and contributes sufficient cash to bring Fritz's total capital to $100,000. 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 $44,000 5,000 180,000 115,000 18,500 30,000 Agreed-Upon Valuation $40,000 2,500 90,000 18,500 30,000 The partnership agreement includes the following provisions regarding the division of net income: interest on original investments at 8%, salary allowances of $45,000 (Suarez) and $60,000 (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 $675,000 and expenses were $415,000, for a net income of $260,000. The drawing accounts have debit balances of $45,000 (Suarez) and $60,000 (Fritz). Journalize the entries to close the revenues and expenses and the drawing accounts at September 30, 20Y9.

Answer rating: 100% (QA)

1 Journal entries to record investments Suarez Capital Ac Dr 25000 Cash Ac Dr 25000 Invent... View the full answer