Question

Chapter 12 Test Calculator Print Item Admitting New Partner Brian Caldwell and Adriana Estrada have operated a successful firm for many years, sharing net income and net losses equally. Kris Mays is to be admitted to the partnership on September 1 of the current year, in accordance with the following agreement: a. Assets and liabilities of the old partnership are to be valued at their book values as of August 31, except for the following: 1. Accounts receivable amounting to $2,200 are to be written off, and the allowance for doubtful accounts is to be increased to 5% of the remaining accounts. 2. Merchandise inventory is to be valued at $57,200. 3. Equipment is to be valued at $131,100. b. Mays is to purchase $54,000 of the ownership interest of Estrada for $59,000 cash and to contribute another $29,000 cash to the partnership for a total ownership equity of $83,000. The post-closing trial balance of Caldwell and Estrada as of August 31 is as follows: Caldwell and Estrada Post-Closing Trial Balance August 31, 2019 Debit Balances Credit Balances Cash 5,700 34,800 Accounts Receivable Allowance for Doubtful Accounts 1,200 Merchandise Inventory 53,500 Prepaid Insurance 1,900 Equipment 152,000 Accumulated Depreciation-Fouinment 47.100 1 Check My Work used < Previous Next > o Be Type here to search @ $ 0 A 1:01 AM 3 1 1/27/2020 2020

Answer 1

Answer-1:

Aug.31 $ 2,630 Asset Revaluations Accounts Receivable Allowance for Doubtful Accounts ($34,800-2,200)*5% - $1,200 $ 2,200 430 3,700 Aug.31 Merchandise Inventory Asset Revaluations ($57,200-53,500) 3,700 47,100 Aug.31 |Accumulated Depreciation Equipment Equipment Asset Revaluations 20,900 26,200 27,270 Aug.31 Asset Revaluations Brian Caldwell, Capital Adriana Estrada, Capital 13,635 13,635

Answer-2:

Sep.01 $ 54,000 Adriana Estrada, Capital Kris Mays, Capital $ 54,000 Sep.01 29,000 Cash Kris Mays, Capital 29,000

Answer-3:

34700 CALDWELL, ESTRADA AND MAYS BALANCE SHEET September 1, 2019 Assets Current Assets: Cash Account Receivable 32600 Less: Allowance for Doubtful Debts 1630 Merchandise Inventory Prepaid Insurance Total Current Assets Plant Assets: Equipment Total Assets 30970 57200 1900 124770 131100 255870 Liabilities Current Liabilities: Account Payable Notes Payable Total Liabilities 13000 35600 48600 Partner's Equity Brian Caldwell, Capital Adriana Estrada, Capital Kris Mays, Capital Total Partner's Capital 94635 29635 83000 207270 Total Liabilities and Partner's Equity 255870