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:

1. 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 $2,800 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 $74,200.
   • Equipment is to be valued at $171,600.
2. Mays is to purchase $70,000 of the ownership interest of Estrada for $76,000 cash and to contribute $38,000 cash to the partnership for a total ownership equity of $108,000.

The post-closing trial balance of Caldwell and Estrada as of August 31 follows:

Caldwell and Estrada
Post-Closing Trial Balance
August 31, 20Y9
	Debit Balances		Credit Balances
Cash	7,400
Accounts Receivable	45,200
Allowance for Doubtful Accounts			1,600
Merchandise Inventory	69,300
Prepaid Insurance	2,500
Equipment	199,000
Accumulated DepreciationEquipment			61,700
Accounts Payable			17,900
Notes Payable (current)			46,200
Brian Caldwell, Capital			105,000
Adriana Estrada, Capital			91,000
	323,400		323,400

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

Aug. 31-Accounts Receivable		fill in the blank 908d44041fe7fdb_2	fill in the blank 908d44041fe7fdb_3
		fill in the blank 908d44041fe7fdb_5	fill in the blank 908d44041fe7fdb_6
		fill in the blank 908d44041fe7fdb_8	fill in the blank 908d44041fe7fdb_9
Aug. 31-Merchandise Inventory		fill in the blank 908d44041fe7fdb_11	fill in the blank 908d44041fe7fdb_12
		fill in the blank 908d44041fe7fdb_14	fill in the blank 908d44041fe7fdb_15
Aug. 31-Equipment		fill in the blank 908d44041fe7fdb_17	fill in the blank 908d44041fe7fdb_18
		fill in the blank 908d44041fe7fdb_20	fill in the blank 908d44041fe7fdb_21
		fill in the blank 908d44041fe7fdb_23	fill in the blank 908d44041fe7fdb_24
Aug. 31-Close		fill in the blank 908d44041fe7fdb_26	fill in the blank 908d44041fe7fdb_27
		fill in the blank 908d44041fe7fdb_29	fill in the blank 908d44041fe7fdb_30
		fill in the blank 908d44041fe7fdb_32	fill in the blank 908d44041fe7fdb_33

2. Journalize the additional entries to record Mays' entrance to the partnership on September 1, 20Y9. If an amount box does not require an entry, leave it blank.

Sept. 1-Purchase capital		fill in the blank 18c303004fbf008_2	fill in the blank 18c303004fbf008_3
		fill in the blank 18c303004fbf008_5	fill in the blank 18c303004fbf008_6
Sept. 1-Contribute cash		fill in the blank 18c303004fbf008_8	fill in the blank 18c303004fbf008_9
		fill in the blank 18c303004fbf008_11	fill in the blank 18c303004fbf008_12

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

Caldwell, Estrada, and Mays
Balance Sheet
September 1, 20Y9
Assets
Current assets:
		$fill in the blank c09f39fda01004b_2
	$fill in the blank c09f39fda01004b_4
	fill in the blank c09f39fda01004b_6	fill in the blank c09f39fda01004b_7
		fill in the blank c09f39fda01004b_9
		fill in the blank c09f39fda01004b_11
Total current assets			$fill in the blank c09f39fda01004b_12
Property, plant, and equipment:
			fill in the blank c09f39fda01004b_14
Total assets			$fill in the blank c09f39fda01004b_15
Liabilities
Current liabilities:
		$fill in the blank c09f39fda01004b_17
		fill in the blank c09f39fda01004b_19
Total liabilities			$fill in the blank c09f39fda01004b_20
Partners' Equity
		$fill in the blank c09f39fda01004b_22
		fill in the blank c09f39fda01004b_24
		fill in the blank c09f39fda01004b_26
Total partners' equity			fill in the blank c09f39fda01004b_27
Total liabilities and partners' equity			$fill in the blank c09f39fda01004b_28