Question

Instructions Musa Moshref and Shaniqua Hollins have operated a successful firm for many years, sharing net income and net losses equally. Taylor Anderson is to be admitted to the partnership on July 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 June 30, except for the following: CANAL Accounts receivable amounting to $2,400 are to be written off and the allowance for doubtful account is to be increased to 5% of the remaining accounts. • Merchandise inventory is to be valued at $77 200. • Equipment is to be valued at $156,200. b. Anderson is to purchase $70,400 of the ownership interest of Hollins for $75,400 cash and to contribute another $45,400 cash to the partnership for a total ownership equity of $115,800 The post-closing trial balance of Moshref and Hollins as of June 30 is as follows:

Answer 1

1.

Accounting Equation = Liabilities + Equity Date Description Post Ref. Debit Credit Assets Jun. 30 $2,600 ($2,600) Asset Revaluations Accounts receivable Allowance for Doubtful Accounts [($42,100 - $2,400) 5%] - $1785 $2.400 $200 ($2,400) (S200) Jun 30 $5,600 $5,600 Merchandise Inventory Asset Revaluations ($77,200 - $71,600) $5,600 $5,600 Jun 30 $42,500 Accumulated Deprecation-Equipment Equipment ($180,000 - $156,200) Asset Revaluation $42.500 ($23,800) $23.800 $18.700 $18.700

Jun 30 $21,700 Asset Revaluation ($18700+$5600-$2600) Musa, capital Shaniqua, capital $10.850 $10,850 b Jul. 01 $70.400 Shaniqua, capital Taylor Anderson, capital ($70.400) $70,400 $70,400 Jul. 01 Cash $45.400 $45.400 Taylor Anderson, capital $45.400 $45.400

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Prepare Balance Sheet as follows:

Balance Sheet Assets Cash ($8300+S45400) Accounts receivable ($42.100 - $2400) $39.700 Less: Allowance for doubtful accounts ($1785+$200) ($1.985) $53,700 $37,715 Merchandise Inventory ($71600+$5600) Prepaid insurance Total current assets $77,200 $2,600 $171.215 Property, plant & equipment: Equipment ($180,000 - $23800) Total Assets $156,200 $327,415

$20.700 $34.700 Liabilities: Current Liabilities Accounts payable Notes payable Total liabilities Partner's equity Musa, capital ($119315+$10850) Shaniqua, capital (585600+$10850-$70400) Taylor, capital ($70400+$45400) $55,400 $130,165 $26,050 $115,800 $272.015 Total Liabilities & Partner's equity $327,415