Bow and Mon are partners in a retail business and divide profits 60 percent to Bow and 40 percent to Mon. Their capital balances at December 31, 2011, are as follows:
Bow capital | $90,000 |
Mon capital | 90,000 |
Total capital | $180,000 |
Partnership assets and liabilities have book values equal to fair values. The partners agree to admit Joh into the partnership. Joh purchases a one-third interest in partnership capital and profits directly from Bow and Mon (one-third of each of their capital accounts) for $75,000.
REQUIRED: Prepare journal entries for the admission of Joh into the partnership, assuming that partnership assets are revalued.
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