The capital accounts of Angel Alvarez and Emma Allison have balances of $46,850 and $72,000, respectively, on January 1, 20Y4, the beginning of the fiscal year. On March 10, Alvarez invested an additional $8,360. During the year, Alvarez and Allison withdrew $32,230 and $40,410, respectively, and net income for the year was $62,000. Revenues were $483,000, and expenses were $421,000. The articles of partnership make no reference to the division of net income.

Required:

A.

Journalize the entries to close (1) the revenues and expenses and (2) the drawing accounts on December 31. Refer to the Chart of Accounts for exact wording of account titles.

B.

Prepare a statement of partnership equity for the current year for the partnership of Alvarez and Allison. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.

CHART OF ACCOUNTS

Alvarez and Allison

General Ledger

	ASSETS
110	Cash
111	Petty Cash
112	Accounts Receivable
113	Allowance for Doubtful Accounts
114	Interest Receivable
115	Notes Receivable
116	Inventory
117	Office Supplies
118	Store Supplies
119	Prepaid Insurance
120	Land
123	Equipment
124	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	Angel Alvarez, Capital
311	Angel Alvarez, Drawing
312	Emma Allison, Capital
313	Emma Allison, Drawing

	REVENUE
410	Revenues
610	Interest Revenue

	EXPENSES
510	Cost of Merchandise Sold
520	Expenses
521	Advertising Expense
522	Depreciation Expense-Equipment
523	Delivery Expense
524	Repairs Expense
529	Selling Expenses
531	Rent Expense
533	Insurance Expense
534	Office Supplies Expense
535	Store Supplies Expense
536	Credit Card Expense
537	Cash Short and Over
538	Bad Debt Expense
539	Miscellaneous Expense
710	Interest Expense

Amount Descriptions
Add partner withdrawals
Balance, December 31, 20Y4
Balance, January 1, 20Y4
Balances after realization
Balances before realization
Additional investment during the year
Withdrawals during the year
Net income for the year
Net loss for the year
Payment of liabilities
Receipt of deficiency
Sale of assets and division of gain
Sale of assets and division of loss

A. Journalize the entries to close (1) the revenues and expenses and (2) the drawing accounts on December 31. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 10

JOURNAL

ACCOUNTING EQUATION

DATE

DESCRIPTION

POST. REF.

DEBIT

CREDIT

ASSETS

LIABILITIES

EQUITY

1

Closing Entries

2

3

4

5

6

7

8

9

B. Prepare a statement of partnership equity for the current year for the partnership of Alvarez and Allison. Refer to the information given and the list of Amount Descriptions provided for the exact wording of the answer choices for text entries. If there is a decrease in partners equity, enter that amount as a negative number using a minus sign.

ALVAREZ AND ALLISON

Statement of Partnership Equity

For the Year Ended December 31, 20Y4

1		Angel Alvarez, Capital	Emma Allison, Capital	Total Partnership Capital
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3
4
5
6