Reference no: EM132994080

Question - On June 30, Mateo and Cain formed a partnership. The partners agreed to invest equal amounts of capital.

Mateo invested his proprietorship's assets and liabilities as follows:

Accounts Receivable 72,000

Merchandise Inventory 223,400

Prepaid Expenses 17,000

Office Equipment 459,000

Accumulated Depreciation-Equipment 153,000

Accounts Payable 191,000

Cain is to invest cash equal to Mateo's capital after taking effect of the following revaluation agreed by the partners:

A. An allowance of 10,500 of the accounts receivable should be provided;

B. Merchandise Inventory is to be valued at 241,000.

During the remainder of the year, the partnership earned 450,000.

Requirements -

1) Prepare the Journal entries to record the adjustments on the books of Mateo.

2) Prepare the journal entries to close the books of Mateo. (CLOSING ENTRIES)

3) Prepare the journal entries to record the initial investments of partners in the new books of Partnership.

4) Prepare the Partnership's Statement of Financial Position immediately after its formation on June 30.

5) Prepare the journal entry to record the division of profit earned during the remainder of the year.