Required:

Prepare the necessary journal entries in the books of Mulles. Also, record the formation of the partnership in a
new set of books.

Adjusting
Old Books of Mulles

a. Mulles, Capital 304,000

Accounts Receivable 304,000

Allowance for Uncollectible Accounts 117,000

Mulles, Capital 117,000

b. Mulles, Capital 112,500

Inventory 112,500

c. Mulles, Capital 29,250

Prepaid Rent 29250

d. Mulles, Capital 90,000

Store Equipment 90,000

Accumulated Depreciation 97,500

Mulles, Capital 97,500

e. No entries necessary
Old Book of Mulles (Closing)

Notes Payable 330,000

Accounts Payable 505,500
Mulles, Capital 2,393,000
Cash 229, 500
Accounts Receivable 1, 799,000
Inventory 900, 000
Store Equipment 300,000

New Set of Books- Partnership (Transfer)

Cash 229, 500

Accounts Receivable 1, 799,000
Inventory 900, 000
Store Equipment 300,000
Notes Payable 330,000
Accounts Payable 505,500
Mulles, Capital 2,393,000

Cash 443, 000

Building 1,450,000
Land 500,000
Lucena, Capital 2,393,000
 Mulles & Lucena Storage and Sales
Statement of Financial Positions
July 1, 2019

Assets
Cash 672, 500
Accounts Receivable 1,799,000
Inventory 900,000
Store Equipment 300,000
Building 1,450,000
Land 500,000
Total Assets 5, 621,500

Liabilities and Capital

Notes Payable 330,000
Accounts Payable 505,000
Mulles, Capital 2,393,000
Lucena, Capital 2,393,000
Total Liabilities and Capital 5,621,500

Computation:
a. Adjusting
Accounts Receivable 2,103,000
1,799,000
Collectible 304,000

b&c no need solution

d. Adjusting
Store Equipment 390,000
Fair Value 300,000
90,000
e. No entries so no solution

Old Books OF Mulles (CLOSING)

Allowance for Uncollectible Accounts 117, 000
- 117,000
0

Accumulated Depreciation 97,500

- 97,500
0

Mulles, Capital
Unadjusted Capital 2,714,250
 a. (304,000)
117,000
b. (112,500)
c. (29,250)
d. (90,000)
97,500

Adjusted Capital 2,393,000

Accounts Receivable 2,103,000

- 1,799,000
304,000

Inventory 1,012,500
- 112,500
900,000

Store Equipment 390,000

- 90,000
300,000
New Set of Books- Partnership

LUCENA

Cash 2,393,000
Land 500,000
Building 1,450,000
443,000- cash to be contributed by Lucena