Problem

Bow and Mon are partners in a retail business and divide profits 60 percent to Bow and 40...

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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Solutions For Problems in Chapter 16