On April 1, 20Y1, Whitney Lang and Eli Capri form a partnership. Lang agrees to invest $15,100 cash and merchandise inventory valued at $40,800. Capri invests certain business assets at valuations agreed upon, transfers business liabilities, and contributes sufficient cash to bring his total capital to $101,000. Details regarding the book values of the business assets and liabilities, and the agreed valuations, follow:

Capri's Ledger Balance Agreed-UponBalance Accounts Receivable $23,100 $18,700 Allowance for Doubtful Accounts 1,000 1,300 Merchandise Inventory 26,900 36,000 Equipment 45,300 43,900 Accumulated DepreciationEquipment 15,100 Accounts Payable 8,200 8,200 Notes Payable (current) 5,000 5,000

The partnership agreement includes the following provisions regarding the division of net income: interest of 10% on original investments, salary allowances of $45,300 (Lang) and $27,600 (Capri), and the remainder equally.

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.

	ACCOUNT	DEBIT	CREDIT
Apr. 1	Accounts ReceivableCashEli Capri, CapitalNotes PayableWhitney Lang, CapitalCash	fill in the blank 2	fill in the blank 3
	Accounts ReceivableEli Capri, CapitalMerchandise InventoryNotes PayableWhitney Lang, CapitalMerchandise Inventory	fill in the blank 5	fill in the blank 6
	Accounts PayableCashEli Capri, CapitalMerchandise InventoryWhitney Lang, CapitalWhitney Lang, Capital	fill in the blank 8	fill in the blank 9
Apr. 1	Accounts PayableAllowance for Doubtful AccountsCashNotes PayableWhitney Lang, CapitalCash	fill in the blank 11	fill in the blank 12
	Accounts PayableAccounts ReceivableAllowance for Doubtful AccountsNotes PayableWhitney Lang, CapitalAccounts Receivable	fill in the blank 14	fill in the blank 15
	Accounts PayableAllowance for Doubtful AccountsMerchandise InventoryNotes PayableWhitney Lang, CapitalWhitney Lang, Capital	fill in the blank 17	fill in the blank 18
	Accounts PayableAllowance for Doubtful AccountsEquipmentNotes PayableWhitney Lang, CapitalEquipment	fill in the blank 20	fill in the blank 21
	Accounts ReceivableAllowance for Doubtful AccountsCashEquipmentWhitney Lang, CapitalAllowance for Doubtful Accounts	fill in the blank 23	fill in the blank 24
	Accounts PayableAccounts ReceivableCashEquipmentWhitney Lang, CapitalWhitney Lang, Capital	fill in the blank 26	fill in the blank 27
	Accounts ReceivableCashEquipmentNotes PayableWhitney Lang, CapitalNotes Payable	fill in the blank 29	fill in the blank 30
	Accounts ReceivableCashEli Capri, CapitalEquipmentWhitney Lang, CapitalEli Capri, Capital	fill in the blank 32	fill 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, 20Y1
Assets
Current assets:
Accounts PayableCashEli Capri, CapitalEquipmentNotes PayableEquipment		fill in the blank 35
Accounts PayableAccounts ReceivableEquipmentNotes PayableWhitney Lang, CapitalAccounts Receivable	fill in the blank 37
Less Accounts PayableLess Accounts ReceivableLess Allowance for Doubtful AccountsLess CashLess Whitney Lang, Capital	fill in the blank 39	fill in the blank 40
Accounts PayableEquipmentMerchandise InventoryNotes PayableWhitney Lang, Capital		fill in the blank 42
Total current assets			$ fill in the blank 43
Property, plant, and equipment:
Accounts ReceivableAllowance for Doubtful AccountsCashEquipmentMerchandise Inventory			fill in the blank 45
Total assets			$ fill in the blank 46
Liabilities
Current liabilities:
Accounts PayableAccounts ReceivableCashEli Capri, CapitalEquipment		$ fill in the blank 48
Accounts ReceivableCashEquipmentMerchandise InventoryNotes Payable		fill in the blank 50
Total liabilities			$ fill in the blank 51
Partners' Equity
Accounts ReceivableCashEquipmentMerchandise InventoryWhitney Lang, Capital		$ fill in the blank 53
Accounts ReceivableCashEli Capri, CapitalEquipmentMerchandise Inventory		fill in the blank 55
Total partners' equity			fill in the blank 56
Total 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 $497,000 and expenses were $358,000, for a net income of $139,000. The drawing accounts have debit balances of $49,000 (Lang) and $42,000 (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, Drawing	fill in the blank 59	fill in the blank 60
	CashEli Capri, DrawingExpensesRevenuesWhitney Lang, Drawing	fill in the blank 62	fill in the blank 63
	Accounts ReceivableCashEli Capri, DrawingRevenuesWhitney Lang, Capital	fill in the blank 65	fill in the blank 66
	Accounts PayableCashEli Capri, CapitalRevenuesWhitney Lang, Drawing	fill in the blank 68	fill in the blank 69
Mar. 31	CashEli Capri, DrawingRevenuesWhitney Lang, CapitalWhitney Lang, Drawing	fill in the blank 71	fill in the blank 72
	CashEli Capri, CapitalEli Capri, DrawingRevenuesWhitney Lang, Drawing	fill in the blank 74	fill in the blank 75
	CashEli Capri, CapitalRevenuesWhitney Lang, CapitalWhitney Lang, Drawing	fill in the blank 77	fill in the blank 78
	CashEli Capri, CapitalEli Capri, DrawingRevenuesWhitney Lang, Capital	fill in the blank 80	fill in the blank 81