Question

Admitting New Partners Who Buy an Interest and Contribute Assets

The capital accounts of Trent Henry and Tim Chou have balances of $139,000 and $100,000, respectively. LeAnne Gilbert and Becky Clarke are to be admitted to the partnership. Gilbert buys one-fifth of Henry’s interest for $32,000 and one-fourth of Chou’s interest for $22,000. Clarke contributes $33,900 cash to the partnership, for which she is to receive an ownership equity of $33,900.

a1. 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.

	Trent Henry, Capital
	Tim Chou, Capital
	LeAnne Gilbert, Capital

a2. Journalize the entry to record the admission of Clarke.

	Cash
	Becky Clarke, Capital

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

a1
Trent Henry,Capital	27800		=139000*1/5
Tim Chou,Capital	25000		=100000*1/4
LeAnne Gilbert,Capital		52800
a2
Cash	33900
Becky Clarke,Capital		33900
b
	Capital Balance
Trent Henry	111200		=139000-27800
Tim Chou	75000		=100000-25000
LeAnne Gilbert	52800
Becky Clarke	33900