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On March 1, 20Y8, Eric Keene and Renee Wallace form a partnership. Keene agrees to invest $21,060 in cash and merchandise inventory valued at $56,290. Wallace invests certain business assets at valuations agreed upon, transfers business liabilities, and contributes sufficient cash to bring her total capital to $59,950. Details regarding the book values of the business assets and liabilities, and the agreed valuations, follow:

	Wallaces Ledger	Agreed-Upon
	Balance	Valuation
Accounts Receivable	$18,650	$17,770
Allowance for Doubtful Accounts	1,580	1,950
Equipment	83,230	54,190
Accumulated Depreciation	30,260
Accounts Payable	14,910	14,910
Notes Payable (current)	35,970	35,970

The partnership agreement includes the following provisions regarding the division of net income: interest on original investments at 10%, salary allowances of $22,660 (Keene) and $30,270 (Wallace), and the remainder equally.

	Required:
1.	Journalize the entries on March 1 to record the investments of Keene and Wallacein the partnership accounts.*
2.	Prepare a balance sheet as of March 1, 20Y8, the date of formation of the partnership of Keene and Wallace.*
3.	After adjustments at February 28, 20Y9, the end of the first full year of operations, the revenues were $293,150 and expenses were $203,500, for a net income of $89,650. The drawing accounts have debit balances of $27,600 (Keene) and $30,800 (Wallace). Journalizethe entries to close the revenues and expenses and the drawing accounts at February 28, 20Y9.* *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.

Journal

1. Journalize the entries on March 1 to record the investments of Keene and Wallacein the partnership accounts. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 5

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1	Text entry invalid
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3. After adjustments at February 28, 20Y9, the end of the first full year of operations, the revenues were $293,150 and expenses were $203,500, for a net income of $89,650. The drawing accounts have debit balances of $27,600 (Keene) and $30,800 (Wallace). Journalizethe entries to close the revenues and expenses and the drawing accounts at February 28, 20Y9. Refer to the Chart of Accounts for exact wording of account titles. If required, round your answers to two decimal places.

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JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1		Closing Entries
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Balance Sheet

2. Prepare a balance sheet as of March 1, 20Y8, the date of formation of the partnership of Keene and Wallace. 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. Enter current assets in order of liquidity. Less, Add, or colons (:) will automatically appear if required.

Keene and Wallace

Balance Sheet

March 1, 20Y8

1	Assets
2
3
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11	Liabilities
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16	Partners Equity
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