On April 1, 20Y1, Whitney Lang and Eli Capri form a partnership. Lang agrees to invest $18,000 cash and merchandise inventory valued at $50,000. Capri invests certain business assets at valuations agreed upon, transfers business liabilities, and contributes sufficient cash to bring his total capital to $120,000. Details regarding the book values of the busi- ness assets and liabilities, and the agreed valuations, follow: Capri's Ledger Balance Agreed-Upon Balance Accounts Receivable $45,700 $43,400 Allowance for Doubtful Accounts 3,200 3,500 Merchandise Inventory 31,500 28,900 89,500 19,000 23,400 Equipment Accumulated Depreciation-Equipment Accounts Payable Notes Payable (current) 63,400 23,400 15,000 15,000 The partnership agreement includes the following provisions regarding the division of net income: interest of 10% on original investments, salary allowances of $36,000 (Lang) and $22,000 (Capri), and the remainder equally. Instructions 1. Journalize the entries to record the investments of Lang and Capri in the partnership accounts. 2. Prepare a balance sheet as of April 1, 20Y1, the date of formation of the partnership of Lang and Capri. 3. After adjustments at March 31, 20Y2, the end of the first full year of operations, the revenues were $598,000 and expenses were $480,000, for a net income of $118,000. (Continued) The drawing accounts have debit balances of $40,000 (Lang) and $30,000 (Capri). Journalize the entries to close the revenues and expenses and the drawing accounts at March 31, 20Y2.
On April 1, 20Y1, Whitney Lang and Eli Capri form a partnership. Lang agrees to invest $18,000 cash and merchandise inventory valued at $50,000. Capri invests certain business assets at valuations agreed upon, transfers business liabilities, and contributes sufficient cash to bring his total capital to $120,000. Details regarding the book values of the busi- ness assets and liabilities, and the agreed valuations, follow: Capri's Ledger Balance Agreed-Upon Balance Accounts Receivable $45,700 $43,400 Allowance for Doubtful Accounts 3,200 3,500 Merchandise Inventory 31,500 28,900 89,500 19,000 23,400 Equipment Accumulated Depreciation-Equipment Accounts Payable Notes Payable (current) 63,400 23,400 15,000 15,000 The partnership agreement includes the following provisions regarding the division of net income: interest of 10% on original investments, salary allowances of $36,000 (Lang) and $22,000 (Capri), and the remainder equally. Instructions 1. Journalize the entries to record the investments of Lang and Capri in the partnership accounts. 2. Prepare a balance sheet as of April 1, 20Y1, the date of formation of the partnership of Lang and Capri. 3. After adjustments at March 31, 20Y2, the end of the first full year of operations, the revenues were $598,000 and expenses were $480,000, for a net income of $118,000. (Continued) The drawing accounts have debit balances of $40,000 (Lang) and $30,000 (Capri). Journalize the entries to close the revenues and expenses and the drawing accounts at March 31, 20Y2.
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
Transcribed Image Text:On April 1, 20Y1, Whitney Lang and Eli Capri form a partnership. Lang agrees to invest
$18,000 cash and merchandise inventory valued at $50,000. Capri invests certain business
assets at valuations agreed upon, transfers business liabilities, and contributes sufficient
cash to bring his total capital to $120,000. Details regarding the book values of the busi-
ness assets and liabilities, and the agreed valuations, follow:
Capri's Ledger
Balance
Agreed-Upon
Balance
Accounts Receivable
$45,700
$43,400
Allowance for Doubtful Accounts
3,200
3,500
Merchandise Inventory
31,500
28,900
89,500
19,000
23,400
Equipment
Accumulated Depreciation-Equipment
Accounts Payable
Notes Payable (current)
63,400
23,400
15,000
15,000
The partnership agreement includes the following provisions regarding the division of
net income: interest of 10% on original investments, salary allowances of $36,000 (Lang)
and $22,000 (Capri), and the remainder equally.
Instructions
1. Journalize the entries to record the investments of Lang and Capri in the partnership
accounts.
2. Prepare a balance sheet as of April 1, 20Y1, the date of formation of the partnership
of Lang and Capri.
3. After adjustments at March 31, 20Y2, the end of the first full year of operations, the
revenues were $598,000 and expenses were $480,000, for a net income of $118,000.
(Continued)
Transcribed Image Text:The drawing accounts have debit balances of $40,000 (Lang) and $30,000 (Capri).
Journalize the entries to close the revenues and expenses and the drawing accounts
at March 31, 20Y2.
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