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: Wallace’s 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:
a. Journalize the entries on March 1 to record the investments of Keene and Wallacein the partnership accounts.
b. Prepare a balance sheet as of March 1, 20Y8, the date of formation of the partnership of Keene and Wallace.