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: 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. Merchandise Inventory is to be valued at $55,700. Equipment is to be valued at $123,400. b. Mays is to purchase $53,000 of the ownership interest of Estrada for $58,000 cash and to contribute $29,000 cash to the partnership for a total ownership equity of $82,000 The post-closing trial balance of Caldwell and Estrada as of August 31 follows: Caldwell and Estrada Post-Closing Trial Balance August 31, 2019 Debit Balances Credit Balances Cash 5,500 Accounts Receivable 34,000 1,200 Allowance for Doubtful Accounts Merchandise Inventory 52,100 1,900 Prepaid Insurance Caldwell and Estrada Post-Closing Trial Balance August 31, 2049 Debit Credit Balances Balances Cash 5,500 34,000 1,200 52,100 1,900 Accounts Receivable Allowance for Doubtful Accounts Merchandise Inventory Prepaid Insurance Equipment Accumulated Depreciation-Equipment Accounts Payable Notes Payable (current) 143,000 44,300 8,200 34,800 Brian Caldwell, Capital 79,000 Adriana Estrada, Capital 69,000 236,500 236,500 Required: Required: 1. Journalize the entries as of August 31 to record the revaluations, using a temporary account entitled Asset Revaluations. Debits and credits to the asset revaluations account are losses and gains from revaluation, respectively. The balance in the accumulated depreciation account is to be eliminated. After journalizing the revaluations, close the balance of the asset revaluations account to the capital accounts of Brian Caltwell and Adriana Estrada. If an amount box does not require an entry, leave it blank Aug. 31-Accounts Receivable Aug 31-Merchandise Inventory III II III III III II III III Aug. 31-Equipment Aug. 31-Close 2. Journalize the additional entries to record Mays' entrance to the partnership on September 1, 2019. If an amount box does not require an entry, leave it blank Sept. 1-Purchase capital II ID Sept. 1-Contribute cash 3. Present a balance sheet for the new partnership as of September 1, 2019 Caldwell, Estrada, and Mays Balance Sheet September 1, 2019 Current assets Total current assets Total current assets Property, plant, and equipment: Total assets Liabilities Current liabilities: Total liabilities Partners' Equity Total partners' equity Total liabilities and partners' equity Check My Work 3 more Check My Work uses remaining
