Musa Moshref and Shaniqua Hollins have operated a successful firm for many years, sharing net income and net losses equally. Taylor Anderson is to be admitted to the partnership on July 1 of the current year, in accordance with the following agreement:
a. Assets and liabilities of the old partnership are to be valued at their book values as of June 30, except for the following:
• Accounts receivable amounting to $2,700 are to be written off, and the allowance for doubtful accounts is to be increased to 5% of the remaining accounts.
• Merchandise inventory is to be valued at $76,800.
• Equipment is to be valued at $154,900.
b. Anderson is to purchase $69,200 of the ownership interest of Hollins for $75,300 cash and to contribute another $45,000 cash to the partnership for a total ownership equity of $114,200.