The balance sheet shows two wrong answers $43,400 and $3,500. What is the solution for these?

Entries and balance sheet for partnership

Capris ledger balance Agreed upon balance

Accounts receivable 45,000 43,400

Allowance for doubtful accounts 3,200 3,500

Merchandise inventory 31,500 28,900

Equipment 89,500

Accumulated depreciation-equipment 19,000 63,400

Accounts payable 23,400 23,400

Notes payable (current) 15,000 15,000

On April 1, 20Y1, Whitney Lang and Eli Capri form a partnership. Lang agrees to invest $18,000 cash and merchandise inventory valued at $50,000. Capri invests certain business assets at valuations agreed upon, transfers business liabilities, and contributes sufficient cash to bring his total capital to $120,000. Details regarding the book values of the business assets and liabilities, and the agreed valuations, follow:

The partnership agreement includes the following provisions regarding the division of net income: interest of 10% on original investments, salary allowances of $36,000 (Lang) and $22,000 (Capri), and the remainder equally.

Instructions

1. Journalize the entries to record the investments of Lang and Capri in the partnership accounts.
2. Prepare a balance sheet as of April 1, 20Y1, the date of formation of the partnership of Lang and Capri.
3. After adjustments at March 31, 20Y2, the end of the first full year of operations, the revenues were $598,000 and expenses were $480,000, for a net income of $118,000. The drawing accounts have debit balances of $40,000 (Lang) and $30,000 (Capri). Journalize the entries to close the revenues and expenses and the drawing accounts at March 31, 20Y2.

   LANG AND CAPRI

   Balance Sheet

   April 1, 20Y1

   Assets

   Current assets:

   Cash $44,200

   Accounts receivable $43,400 *

   Less allowance for doubtful accounts 3,500 * 39,900

   Merchandise inventory 78,900

   Total current assets $163,000

   Property, plant, and equipment:

   Equipment 63,400

   Total assets $226,400