Question

The capital accounts of Angel Alvarez and Emma Allison have balances of $47,740 and $71,570, respectively, on January 1, 20Y4, the beginning of the fiscal year. On March 10, Alvarez invested an additional $7,690. During the year, Alvarez and Allison withdrew $31,410 and $39,630, 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

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

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

Journal

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

Statement of Partnership Equity

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 partner’s 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
2
3
4
5
6

Answer 1