On March 1, 20Y8, Eric Keene and Renee Wallace form a partnership. Keene agrees to invest $23,400

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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:

On March 1, 20Y8, Eric Keene and Renee Wallace form

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.

Balance Sheet
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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Accounting

ISBN: 978-1337899451

27th edition

Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac

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