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 $33,260. Prior to the investment, land was revalued to a market value of $150,560 from a book value of $83,340. Tony Vale and Michael Thorton share net income equally. Thorton had a capital balance of $25,400 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

Journal entries :-

Michael's Capital Before Admission = $25400+$33610 = $59010

Aasif Share = 50% of Michaels share in Business

= $59010 * 50%

= $29505

Particulars Debit ($) Credit ($) A). Lond A/c Dr.($150560-$83340) 67220 To Tony Vale's Capital($67220/2) 33610 To Michael's Capital($67220/2) 33610 (To record Value of land appreciated prior to admission of new Partner, Profit distribute to old partners in old Ratio) B. Michael's Capital A/c Dr. 29505 To Aasifs Capital A/c 29505

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