Question

Admitting New Partners Who Buy an Interest and Contribute Assets The capital accounts of Trent Henry and Tim Chou have balances of $188,500 and $135,600, respectively. LeAnne Gilbert and Becky Clarke are to be admitted to the partnership. Gilbert buys one-fifth of Henry's interest for $43,400 and one-fourth of Chou's interest for $29,800. Clarke contributes $46,000 cash to the partnership, for which she is to receive an ownership equity of $46,000. al. Journalize the entry to record the admission of Gilbert. For a compound transaction, if an amount box does not require an entry, leave it blank. a2. Journalize the entry to record the admission of Clarke. b. What are the capital balances of each partner after the admission of the new partners? Partner Capital Balance Trent Henry Tim Chou LeAnne Gilbert Becky Clarke

Answer 1

Answer:

a1.

Accounts titles and Explanation	Debit ($)	Credit ($)	Calculation
Trent Henry, Capital	37,700		188,500*1/5
Tim Chou, Capital	33,900		135,600*1/4
LeAnne Gilbert, Capital		71,600	sum

a2.

Accounts titles and Explanation	Debit ($)	Credit ($)
Cash	46,000
Becky Clarke, Capital		46,000

b.

	A	B		C		A-B+C
Partner	Opening balance($)	Debit($)	REFERENCE	Credit($)	REFERENCE	Capital Balance
Trent Henry	1,88,500	37,700	Entry a1			1,50,800
Tim Chou	1,35,600	33,900	Entry a1			1,01,700
LeAnne Gilbert	-			71,600	Entry a1	71,600
Becky Clarke	-			46,000	Entry a2	46,000
	3,24,100	71,600		1,17,600		3,70,100