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 yea 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 $1,500 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 $46,800. Equipment is to be valued at $64,500. b. Mays is to purchase $26,000 of the ownership interest of Estrada for $30,000 cash and to contribute $32,000 cash to the partnership for a total ownership equity of $58,000. The post-closing trial balance of Caldwell and Estrada as of August 31 follows: Caldwell and Estrada Post-Closing Trial Balance August 31, 2049 Debit Credit Balances Balances Cash 12,300 Accounts Receivable 19,500 Allowance for Doubtful Accounts 600 Merchandise Inventory 42,500 Prepaid Insurance 1,200 Equipment 67,500 Accumulated Depreciation Equipment 15,500 Accounts Payable 8,900 Notes Payable (current) 15,000 Brian Caldwell, Capital 55,000 Adriana Estrada, Capital 48,000 143,000 143,000 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 Revaluation 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 Caldwell and Adriana Estrada. For a compound transaction, if an amount box does not require an entry, leave it blank. Aug. 31-Accounts Receivable Asset Revaluations 2,400 Accounts Receivable 1,500 Allowance for Doubtful Accounts 900 Aug. 31-Merchandise Inventory Merchandise Inventory 4,300 Asset Revaluations 4,300 Aug. 31-Equipment Asset Revaluations 3,000 Equipment 3,000 Aug. 31-Close 2. Journalize the additional entries to record Mays' entrance to the partnership on September 1, 2019. Sept. 1-Purchase capital Sept. 1- Contribute cash 3. Present a balance sheet for the new partnership as of September 1, 2019. Caldwell, Estrada, and Mays Balance Sheet 3. Present a balance sheet for the new partnership as of September 1, 2049. Caldwell, Estrada, and Mays Balance Sheet September 1, 2019 Assets Current assets: Total current assets Property, plant, and equipment: Total assets Liabilities Current liabilities: Total liabilities o Partners' Equity Total partners' equity 00 Total liabilities and partners' equity
