Musa Moshref and Shaniqua Hollins have operated a successful firm for many years, sharing net income and net losses equally. Taylor Anderson is to be admitted to the partnership on July 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 June 30, except for the following:

	Accounts receivable amounting to $2,300 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 $76,300.
	Equipment is to be valued at $155,800.

b.

Anderson is to purchase $69,700 of the ownership interest of Hollins for $75,300 cash and to contribute another $45,800 cash to the partnership for a total ownership equity of $115,500.

The post-closing trial balance of Moshref and Hollins as of June 30 is as follows:

Moshref and Hollins

POST-CLOSING TRIAL BALANCE

June 30, 2016

	ACCOUNT TITLE	DEBIT	CREDIT
1	Cash	8,400.00
2	Accounts Receivable	42,000.00
3	Allowance for Doubtful Accounts		1,585.00
4	Merchandise Inventory	72,200.00
5	Prepaid Insurance	3,600.00
6	Equipment	179,800.00
7	Accumulated Depreciation-Equipment		44,000.00
8	Accounts Payable		20,600.00
9	Notes Payable (current)		34,800.00
10	Musa Moshref, Capital		120,815.00
11	Shaniqua Hollins, Capital		84,200.00
12	Totals	306,000.00	306,000.00

	Required:
1.	Journalize the entries as of June 30 to record the revaluations, using a temporary account entitled Asset Revaluations. 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 Musa Moshref and Shaniqua Hollins.
2.	Journalize the additional entries to record Andersons entrance to the partnership on July 1, 2016. Refer to the Chart of Accounts for exact wording of account titles.
3.	Present a balance sheet for the new partnership as of July 1, 2016. Refer to the information given and the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries.

Chart of Accounts

CHART OF ACCOUNTS

Moshref, Hollins, and Anderson

General Ledger

	ASSETS
110	Cash
111	Petty Cash
112	Accounts Receivable
113	Allowance for Doubtful Accounts
114	Interest Receivable
115	Notes Receivable
116	Merchandise Inventory
117	Supplies
118	Office Supplies
119	Prepaid Insurance
125	Equipment
126	Accumulated Depreciation-Equipment
129	Asset Revaluations
133	Patent

	LIABILITIES
210	Accounts Payable
211	Salaries Payable
213	Sales Tax Payable
214	Interest Payable
215	Notes Payable

	EQUITY
310	Musa Moshref, Capital
311	Musa Moshref, Drawing
312	Shaniqua Hollins, Capital
313	Shaniqua Hollins, Drawing
314	Taylor Anderson, Capital
315	Taylor Anderson, Drawing
330	Income Summary

	REVENUE
410	Sales
610	Interest Revenue

	EXPENSES
510	Cost of Merchandise Sold
520	Salary Expense
521	Advertising Expense
523	Depreciation Expense-Equipment
526	Repairs Expense
529	Selling Expenses
531	Rent Expense
533	Insurance Expense
534	Supplies Expense
535	Office Supplies Expense
536	Credit Card Expense
537	Cash Short and Over
538	Property Tax Expense
539	Miscellaneous Expense
710	Interest Expense

Journal

Required:

1.

Journalize the entries as of June 30 to record the revaluations, using a temporary account entitled Asset Revaluations. 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 Musa Moshref and Shaniqua Hollins.*

2.

Journalize the additional entries to record Andersons entrance to the partnership on July 1, 2016.*

*Refer to the Chart of Accounts for exact wording of account titles.

PAGE 10

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15

Labels and Amount Descriptions

Labels
Current assets
Current liabilities
Plant assets
Amount Descriptions
Total assets
Total current assets
Total liabilities
Total liabilities and members equity
Total liabilities and partners equity
Total members equity
Total partners equity

Balance Sheet

3. Present a balance sheet for the new partnership as of July 1, 2016. Refer to the information given and the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries.

MOSHREF, HOLLINS, AND ANDERSON

Balance Sheet

July 1, 2016

1	Assets
2
3
4
5
6
7
8
9
10
11
12	Liabilities
13
14
15
16
17	Partners Equity
18
19
20
21
22