Aasif Safar purchased one-half of Michael Thorton’s interest in the Vale and Tho

Question

Aasif Safar purchased one-half of Michael Thorton’s interest in the Vale and Thorton partnership for $32,400. Prior to the investment, land was revalued to a market value of $161,870 from a book value of $86,860. Tony Vale and Michael Thorton share net income equally. Thorton had a capital balance of $29,370 prior to these transactions. Required: A. On December 31, provide the journal entry for the revaluation of land.* B. On December 31, provide the journal entry to admit Safar.* *Refer to the Chart of Accounts for exact wording of account titles. Round your answers to the nearest dollar.

Explanation / Answer

Answer

Michaels' Capital =29370+37505 =66875

Aasif share in firm =66875/2 =33437.50

Date Particulars Dr Cr A. 31.dec Land (161870-86860) $75010 Tony Vale's capital a/c $37505 Michael Thorton's capital a/c $37505 (Being land was revalued and Benefit from Revalued distributed to old partners) B. 31.dec Michaels' Capital a/c $33437.50 Aasifs Capital's a/c $33437.50 (Being Aasif purchased 1/2 of Michaels share in business)

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