Admitting New Partner With Bonus L. Bowers and V. Lipscomb are partners in Elega

Question

Admitting New Partner With Bonus L. Bowers and V. Lipscomb are partners in Elegant Event Consultants. Bowers and LUpscomb share income equally. M. Ortiz will be admitted to the partnership. Prior to the admission, equipment was revalued downward by $7,000. The capital balances of each partner are $75,500 and $105,000, respectively, prior to the revaluation. a. Provide the journal entry for the asset revaluation. For a compound transaction, Iif an amount box does not require an entry, leave it blank L. Bowers, Capital V. L M. Ortiz, Capital b. Provide the journal entry for Ortiz's admission under the following independent situations: 1. Ortiz purchased a 20% interest for $38,000. For a compound transaction, if an amount box does not require an entry, leave it blank. 2. Ortiz purchased a 30% interest for $95,000. For a compound transaction, if an amount box does not require an entry. leave it blank Check My Work 3 more Check My Work uses remaining. PreviousNext All work saved. Save and Exit Submit Assignment for Grading 1 F6 F9 10

Explanation / Answer

Date

Accounts and explanations

Debit ($)

Credit ($)

Partners’ capital L Bower

3500

Partners’ capital V Lipscomb

3500

M. Ortiz's capital

7000

(Being the new partner's capital account adjusted against the old partner's capital account)

b. 1:

Partners’ capital L Bower

19000

Partners’ capital V Lipscomb

19000

M. Ortiz's capital

38000

(Being the new partner admitted by adjusting the capital account)

b. 2:

Partners’ capital L Bower

47500

Partners’ capital V Lipscomb

47500

M. Ortiz's capital

95000

(Being the new partner admitted by adjusting the capital account)

The amount of cash on hand

Credit balances of capital:

Lewis

38400

122900

Zapata

84500

122900

Less: Fowler's negative capital

24600

Cash on hand

98300

Date

Accounts and explanations

Debit ($)

Credit ($)

Bank

24600

Fowler's capital account

24600

(Being the cash received from fowler’s for his negative capital)

This transaction must take place in order to repay the other two partner’s their due. If the above cash is received from Fowler then the next transaction will be as follows to repay the outstanding capital account

Lewis' capital

38400

Zapata’s capital

84500

Bank

122900

(Being the outstanding capital balances repaid)

Date

Accounts and explanations

Debit ($)

Credit ($)

Partners’ capital L Bower

3500

Partners’ capital V Lipscomb

3500

M. Ortiz's capital

7000

(Being the new partner's capital account adjusted against the old partner's capital account)

b. 1:

Partners’ capital L Bower

19000

Partners’ capital V Lipscomb

19000

M. Ortiz's capital

38000

(Being the new partner admitted by adjusting the capital account)

b. 2:

Partners’ capital L Bower

47500

Partners’ capital V Lipscomb

47500

M. Ortiz's capital

95000

(Being the new partner admitted by adjusting the capital account)

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