Brian Caldwell and Adriana Estrada have operated a successful firm for many years, sharing net income and net losses equally.
a. Assets and liabilities of the old partnership are to be valued at their book values as of August 31, except for the following:
¢ Accounts receivable amounting to $1,500 are to be written off, and the allowance for doubtful accounts is to be increased to 5% of the remaining accounts.
¢ Merchandise inventory is to be valued at $46,800.
¢ Equipment is to be valued at $64,500.
b. Mays is to purchase $26,000 of the ownership interest of Estrada for $30,000 cash and to contribute $32,000 cash to the partnership for a total ownership equity of $58,000.
The post-closing trial balance of Caldwell and Estrada as of August 31 follows:
1. Journalize the entries as of August 31 to record the revaluations, using a temporary account entitled Asset Revaluations. The balance in the accumulated depreciation account is to be eliminated. After journalizing the revaluations, close the balance of the asset revaluations account to the capital accounts of Brian Caldwell and Adriana Estrada.
2. Journalize the additional entries to record Mays' entrance to the partnership on September 1, 2016.
3. Present a balance sheet for the new partnership as of September 1, 2016.
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...
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