Question

The capital accounts of Trent Henry and Tim Chou have balances of $185,000 and $133,200, respectively. LeAnne Gilbert and Becky Clarke are to be admitted to the partnership. Gilbert buys one-fifth of Henry’s interest for $42,600 and one-fourth of Chou’s interest for $29,300. Clarke contributes $45,100 cash to the partnership, for which she is to receive an ownership equity of $45,100.

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

Answer -

(a.1) -- Journalize the entry to record the admission of Gilbert.

Answer -

Account Titles	Debit ($)	Credit ($)
Trent Henry, Capital [$185000 * 1/5] Tim Chou, Capital [$133200 * 1/4] LeAnne Gilbert, Capital	37000 33300 -	- - 70300

.

(a.2) -- Journalize the entry to record the admission of Clarke.

Answer -

Account Titles	Debit ($)	Credit ($)
Cash [Given in question] Becky Clarke, Capital	45100 -	- 45100

.

(b) -- What are the capital balances of each partner after the admission of the new partners?

Answer -

Partner	Calculation	Capital Balance
Trent Henry	$185000 - $37000	$148000
Tim Chou	$133200 - $33300	$99900
LeAnne Gilbert	Calculated in Part (a.1)	$70300
Becky Clarke	Calculated in Part (a.2)	$45100