Bill and Jane share profits and losses in a 70:30 ratio. Mike is to be admitted into a partnership upon the investment of $12,800 for a one-third capital interest. Account balances for Bill and Jane on June 30, 2014 just before the admission of Mike are as follows: Credit Cash Accounts Receivable Notes Receivable Merchandise Inventory Prepaid Insurance Accounts Payable Bill, Capital Jane, Capital Debit $5,500 8,000 2,100 12,100 600 $9,000 11,800 7,500 $28,300 $28,300 It is agreed that for purposes of establishing the interests of the former partners, the following adjustments shall be made: 1. An allowance for doubtful accounts of 2% of the accounts receivable is to be established. 2. The merchandise inventory is to be valued at $10,100. 3. Accrued expenses of $700 are to be recognized. 4. Prepaid insurance is to be valued at $360. 5. The goodwill method is to be used to record the admission of Mike. Prepare the entries to adjust the account balances in establishing the interests of Bill and Jane and to record the investment by Mike. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) No. Account Titles and Explanation Debit Credit 1. (To close expense accounts) (To close expense accounts) HHHHHHHHHHHHH (To close income summary) (To record goodwill) (To record investment by Mike)