Question

L. Bowers and V. Lipscomb are partners in Elegant Event Consultants. Bowers and Lipscomb share income equally. M. Ortiz will be admitted to the partnership. Prior to the admission, equipment was revalued downward by $8,800. The capital balances of each partner are $93,400 and $41,500, respectively, prior to the revaluation. Required: A. On December 31, provide the journal entry for the asset revaluation. Refer to the Chart of Accounts for exact wording of account titles. B. On December 31, provide the journal entry for Ortiz’s admission under the following independent situations (refer to the Chart of Accounts for exact wording of account titles): 1. Ortiz purchased a 20% interest for $21,400. 2. Ortiz purchased a 30% interest for $59,900.

CHART OF ACCOUNTS
Elegant Event Consultants
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 L. Bowers, Capital 311 L. Bowers, Drawing 312 V. Lipscomb, Capital 313 V. Lipscomb, Drawing 314 M. Ortiz, Capital 315 M. Ortiz, Drawing	REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Merchandise Sold 520 Salaries Expense 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

X

Journal

Shaded cells have feedback.

Answer 1

	Date	Accounts Titles and Explanation	Debit	Credit
A	31-Dec	L. Bowers, Capital	$4,400
		V. Lipscomb, Capital	$4,400
		Equipment		$8,800
B
i	31-Dec	Cash	$21,400
		L. Bowers, Capital	$4,050
		V. Lipscomb, Capital	$4,050
		M. Ortiz, Capital		$29,500
ii	31-Dec	Cash	$59,900
		L. Bowers, Capital		$2,050
		V. Lipscomb, Capital		$2,050
		M. Ortiz, Capital		$55,800
		Working
	i	L. Bowers, Capital	$89,000
		V. Lipscomb, Capital	$37,100
		Contribution by Jenkins	$21,400
		Total equity interest after admission	$147,500
		L.Jenkins, Capital x 20%	$29,500
		Contribution by Jenkins	$21,400
		Bonus Paid to Jenkins	$8,100
	ii	L. Bowers, Capital	$89,000
		V. Lipscomb, Capital	$37,100
		Contribution by Jenkins	$59,900
		Total equity interest after admission	$186,000
		L.Jenkins, Capital x 30%	$55,800
		Contribution by Jenkins	$59,900
		Bonus paid to Witt and Torres	($4,100)