Question

Lane Stevens is to retire from the partnership of Stevens and Associates as of March 31,...

Lane Stevens is to retire from the partnership of Stevens and Associates as of March 31, the end of the current fiscal year. After closing the accounts, the capital balances of the partners are as follows: Lane Stevens, $136,890; Cherrie Ford, $70,910; and LaMarcus Rollins, $62,080. They have shared net income and net losses in the ratio of 3:2:2. The partners agree that the merchandise inventory should be increased by $15,890, and the allowance for doubtful accounts should be increased by $1,540. Stevens agrees to accept a note for $105,000 in partial settlement of his ownership equity. The remainder of his claim is to be paid in cash. Ford and Rollins are to share equally in the net income or net loss of the new partnership.

Journalize the entries to record (a) the adjustment of the assets to bring them into agreement with current market prices and (b) the withdrawal of Stevens from the partnership on March 31. Refer to the Chart of Accounts for exact wording of account titles

CHART OF ACCOUNTS
Stevens and Associates
General Ledger
ASSETS
110 Cash
111 Petty Cash
112 Accounts Receivable
113 Allowance for Doubtful Accounts
114 Interest Receivable
115 Notes Receivable
116 Merchandise Inventory
117 Office Supplies
118 Store Supplies
119 Prepaid Insurance
120 Land
123 Equipment
124 Accumulated Depreciation-Equipment
129 Asset Revaluations
133 Patent
LIABILITIES
210 Accounts Payable
211 Salaries Payable
213 Sales Tax Payable
214 Interest Payable
215 Notes Payable
EQUITY
310 Lane Stevens, Capital
311 Lane Stevens, Drawing
312 Cherrie Ford, Capital
313 Cherrie Ford, Drawing
314 LaMarcus Rollins, Capital
315 LaMarcus Rollins, Drawing
REVENUE
410 Sales
610 Interest Revenue
EXPENSES
510 Cost of Merchandise Sold
520 Salaries Expense
521 Advertising Expense
522 Depreciation Expense-Equipment
523 Delivery Expense
524 Repairs Expense
529 Selling Expenses
531 Rent Expense
533 Insurance Expense
534 Office Supplies Expense
535 Store Supplies Expense
536 Credit Card Expense
537 Cash Short and Over
538 Bad Debt Expense
539 Miscellaneous Expense
710 Interest Expense

Journalize the entries to record (a) the adjustment of the assets to bring them into agreement with current market prices and (b) the withdrawal of Stevens from the partnership on March 31. Refer to the Chart of Accounts for exact wording of account titles

PAGE 10

JOURNAL

ACCOUNTING EQUATION

DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY

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