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On March $1,20$Y$8,$ 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:

Wallace$$s Ledger

Agreed$-$Upon

Balance

Valuation

Accounts Receivable $$18,650$ $$17,770$

Allowance for Doubtful Accounts $1,5801,950$

Equipment $83,23054,190$

Accumulated Depreciation $30,260$

Accounts Payable $14,91014,910$

Notes Payable $($current$)35,97035,970$

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 $1,20$Y$8,$ the date of formation of the partnership of Keene and Wallace. Be sure to complete the statement heading. 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. Enter all amounts as positive numbers.

$3.$ After adjustments at February $28,20$Y$9,$ 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 $28,20$Y$9.*$

$*$Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.

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