At the start of 2016, Santana Rey is considering adding a partner to her busines

Question

At the start of 2016, Santana Rey is considering adding a partner to her business. She envisions the new partner taking the lead in generating sales of both services and merchandise for Business Solutions. S. Rey’s equity in Business Solutions as of January 1, 2016, is reflected in the following capital balance. S. Rey, Capital $ 80,360 Required: 2. Prepare the January 1, 2016, journal entries necessary to admit a new partner to Business Solutions through the purchase of a partnership interest for each of the following two separate cases: (a) 1:1 sharing agreement and (b) 4:1 sharing agreement.

Explanation / Answer

Solution 2:

Journal Entries - Business Solutions Event Date Particualrs Debit Credit 2a 1-Jan-16 S. Rey Capital Dr ($80,360*1/2) $40,180.00       To New Partner Capital $40,180.00 (To record purchase of partnership interest by new partner from S Rey) 2b 1-Jan-16 S. Rey Capital Dr ($80,360*1/5) $16,072.00       To New Partner Capital $16,072.00 (To record purchase of partnership interest by new partner from S Rey)

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