Entries and Balance Sheet for Partnership

On April 1, 20Y1, Whitney Lang and Eli Capri form a partnership. Lang agrees to invest $11,100 cash and merchandise inventory valued at $30,000. Capri invests certain business assets at valuations agreed upon, transfers business liabilities, and contributes sufficient cash to bring his total capital to $74,000. Details regarding the book values of the business assets and liabilities, and the agreed valuations, follow:

Capri's Ledger BalanceAgreed-Upon BalanceAccounts Receivable$17,000 $13,800 Allowance for Doubtful Accounts700 900 Merchandise Inventory19,800 26,500 Equipment33,300 32,300 Accumulated DepreciationEquipment11,100 Accounts Payable6,000 6,000 Notes Payable (current)3,700 3,700

The partnership agreement includes the following provisions regarding the division of net income: interest of 8% on original investments, salary allowances of $33,300 (Lang) and $20,300 (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.

ACCOUNTDEBITCREDITApr. 1Accounts ReceivableCashEli Capri, CapitalNotes PayableWhitney Lang, CapitalCashfill in the blank 2fill in the blank 3 Accounts ReceivableEli Capri, CapitalMerchandise InventoryNotes PayableWhitney Lang, CapitalMerchandise Inventoryfill in the blank 5fill in the blank 6 Accounts PayableCashEli Capri, CapitalMerchandise InventoryWhitney Lang, CapitalWhitney Lang, Capitalfill in the blank 8fill in the blank 9 Apr. 1Accounts PayableAllowance for Doubtful AccountsCashNotes PayableWhitney Lang, CapitalCashfill in the blank 11fill in the blank 12 Accounts PayableAccounts ReceivableAllowance for Doubtful AccountsNotes PayableWhitney Lang, CapitalAccounts Receivablefill in the blank 14fill in the blank 15 Accounts PayableAllowance for Doubtful AccountsMerchandise InventoryNotes PayableWhitney Lang, CapitalMerchandise Inventoryfill in the blank 17fill in the blank 18 Accounts PayableAllowance for Doubtful AccountsEquipmentNotes PayableWhitney Lang, CapitalEquipmentfill in the blank 20fill in the blank 21 Accounts ReceivableAllowance for Doubtful AccountsCashEquipmentWhitney Lang, CapitalAllowance for Doubtful Accountsfill in the blank 23fill in the blank 24 Accounts PayableAccounts ReceivableCashEquipmentWhitney Lang, CapitalAccounts Payablefill in the blank 26fill in the blank 27 Accounts ReceivableCashEquipmentNotes PayableWhitney Lang, CapitalNotes Payablefill in the blank 29fill in the blank 30 Accounts ReceivableCashEli Capri, CapitalEquipmentWhitney Lang, CapitalEli Capri, Capitalfill in the blank 32fill in the blank 33

2. 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, 20Y1AssetsCurrent assets: Accounts PayableCashEli Capri, CapitalEquipmentNotes PayableCash fill in the blank 35 Accounts PayableAccounts ReceivableEquipmentNotes PayableWhitney Lang, CapitalAccounts Receivablefill in the blank 37 Less Accounts PayableLess Accounts ReceivableLess Allowance for Doubtful AccountsLess CashLess Whitney Lang, CapitalLess Allowance for Doubtful Accountsfill in the blank 39fill in the blank 40 Accounts PayableEquipmentMerchandise InventoryNotes PayableWhitney Lang, CapitalMerchandise Inventory fill in the blank 42 Total current assets $ fill in the blank 43Property, plant, and equipment: Accounts ReceivableAllowance for Doubtful AccountsCashEquipmentMerchandise InventoryEquipment fill in the blank 45Total assets $ fill in the blank 46LiabilitiesCurrent liabilities: Accounts PayableAccounts ReceivableCashEli Capri, CapitalEquipmentAccounts Payable $ fill in the blank 48 Accounts ReceivableCashEquipmentMerchandise InventoryNotes PayableNotes Payable fill in the blank 50 Total liabilities $ fill in the blank 51Partners' EquityAccounts ReceivableCashEquipmentMerchandise InventoryWhitney Lang, CapitalWhitney Lang, Capital $ fill in the blank 53 Accounts ReceivableCashEli Capri, CapitalEquipmentMerchandise InventoryEli Capri, Capital fill in the blank 55 Total partners' equity fill in the blank 56Total liabilities and partners' equity $ fill in the blank 57

3. After adjustments at March 31, 20Y2, the end of the first full year of operations, the revenues were $447,000 and expenses were $348,000, for a net income of $99,000. The drawing accounts have debit balances of $35,000 (Lang) and $30,000 (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.

ACCOUNTDEBITCREDITMar. 31Eli Capri, CapitalEli Capri, DrawingRevenuesWhitney Lang, CapitalWhitney Lang, DrawingRevenuesfill in the blank 59fill in the blank 60 CashEli Capri, DrawingExpensesRevenuesWhitney Lang, DrawingExpensesfill in the blank 62fill in the blank 63 Accounts ReceivableCashEli Capri, DrawingRevenuesWhitney Lang, CapitalWhitney Lang, Capitalfill in the blank 65fill in the blank 66 Accounts PayableCashEli Capri, CapitalRevenuesWhitney Lang, DrawingEli Capri, Capitalfill in the blank 68fill in the blank 69 Mar. 31CashEli Capri, DrawingRevenuesWhitney Lang, CapitalWhitney Lang, DrawingWhitney Lang, Capitalfill in the blank 71fill in the blank 72 CashEli Capri, CapitalEli Capri, DrawingRevenuesWhitney Lang, DrawingEli Capri, Capitalfill in the blank 74fill in the blank 75 CashEli Capri, CapitalRevenuesWhitney Lang, CapitalWhitney Lang, DrawingWhitney Lang, Drawingfill in the blank 77fill in the blank 78 CashEli Capri, CapitalEli Capri, DrawingRevenuesWhitney Lang, CapitalEli Capri, Drawingfill in the blank 80fill in the blank 81