Question

On March 1, 2016, Eric Keene and Abigail McKee form a partnership. Keene agrees to invest $21,300 in cash and merchandise inventory valued at $56,390. McKee invests certain business assets at valuations agreed upon, transfers business liabilities, and contributes sufficient cash to bring her total capital to $59,940. Details regarding the book values of the business assets and liabilities, and the agreed valuations, follow: McKee’s Ledger Agreed-Upon Balance Valuation Accounts Receivable $18,470 $17,510 Allowance for Doubtful Accounts 1,130 1,420 Equipment 83,500 54,650 Accumulated Depreciation 29,900 – Accounts Payable 14,810 14,810 Notes Payable (current) 36,170 36,170 The partnership agreement includes the following provisions regarding the division of net income: interest on original investments at 10%, salary allowances of $22,330 (Keene) and $30,500 (McKee), and the remainder equally. Required: 1. Journalize the entries on March 1 to record the investments of Keene and McKee in the partnership accounts.* 2. Prepare a balance sheet as of March 1, 2016, the date of formation of the partnership of Keene and McKee.* 3. After adjustments and the closing of revenue and expense accounts at February 28, 2017, the end of the first full year of operations, the income summary account has a credit balance of $90,350, and the drawing accounts have debit balances of $27,850 (Keene) and $30,820 (McKee). Journalize the entries on February 28 to close the income summary account and the drawing accounts at February 28, 2017.* *Refer to the Chart of Accounts and the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries.

Answer 1

Answer to part-1 - Opening Jpurnals Entries

Answer to part 2 - Balance Sheet

Answer for part 3 - Closing Journal