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 $$1,500$ are to be written off, and the allowance for doubtful accounts is to be increased to $5\%$ of the remaining accounts.

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 $31,20Yg$

Accumulated Depreciation$-$Equipment

Required:

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 Caldwell and Adriana Estrada. If an amount box does not require an entry, leave it blank.

Aug. $31-$Accounts Receivable

Aug. $31-$Inventory

Aug. $31-$Equipment

Aug. $31-$Close

Journalize the additional entries to record Mays' entrance to the partnership on September $1,20$Y$9.$ If an amount box does not require an entry, leave it blank.

Sept. $1-$Purchase capital

Sept. $1-$Contribute cash

Present a balance sheet for the new partnership as of September $1,20Yg.$

Caldwell, Estrada, and Mays

Present a balance sheet for the new partnership as of September $1,20Y9.$

Caldwell, Estrada, and Mays

Balance Sheet

September $1,20$Y$9$

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

$

$

$

$

$

$

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