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Entries and Balance Sheet for Partnership

On April 1, 20Y1, Whitney Lang and Eli Capri form a partnership. Lang agrees to invest $19,000 cash and merchandise inventory valued at $51,300. Capri invests certain business assets at valuations agreed upon, transfers business liabilities, and contributes sufficient cash to bring his total capital to $127,000. Details regarding the book values of the business assets and liabilities, and the agreed valuations, follow:

	Capri's Ledger Balance		Agreed-Upon Balance
Accounts Receivable	$29,100		$23,600
Allowance for Doubtful Accounts	1,300		1,600
Merchandise Inventory	33,800		45,300
Equipment	57,000		55,300
Accumulated DepreciationEquipment	19,000
Accounts Payable	10,300		10,300
Notes Payable (current)	6,300		6,300

The partnership agreement includes the following provisions regarding the division of net income: interest of 8% on original investments, salary allowances of $57,000 (Lang) and $34,800 (Capri), and the remainder equally.

Required:

1. Journalize the entries to record the investments of Lang and Capri in the partnership accounts. If an amount box does not require an entry, leave it blank.

Prepare a balance sheet as of April 1, 20Y1, the date of formation of the partnership of Lang and Capri.

Lang and Capri Balance Sheet April 1, 20Y1

Assets

After adjustments at March 31, 20Y2, the end of the first full year of operations, the revenues were $441,000 and expenses were $287,000, for a net income of $154,000. The drawing accounts have debit balances of $54,000 (Lang) and $46,000 (Capri). Journalize the entries to close the revenues and expenses and the drawing accounts at March 31, 20Y2. If an amount box does not require an entry, leave it blank.

	ACCOUNT	DEBIT	CREDIT
Mar. 31	Eli Capri, CapitalEli Capri, DrawingRevenuesWhitney Lang, CapitalWhitney Lang, DrawingRevenues	fill in the blank 59	fill in the blank 60
	CashEli Capri, DrawingExpensesRevenuesWhitney Lang, DrawingExpenses	fill in the blank 62	fill in the blank 63
	Accounts ReceivableCashEli Capri, DrawingRevenuesWhitney Lang, Capital	fill in the blank 65