Admitting New Partners Who Buy an Interest and Contribute Assets The capital acc

Question

Admitting New Partners Who Buy an Interest and Contribute Assets

The capital accounts of Trent Henry and Tim Chou have balances of $193,000 and $138,800, respectively. LeAnne Gilbert and Becky Clarke are to be admitted to the partnership. Gilbert buys one-fifth of Henry’s interest for $44,400 and one-fourth of Chou’s interest for $30,500. Clarke contributes $47,100 cash to the partnership, for which she is to receive an ownership equity of $47,100.

a1. Journalize the entry to record the admission of Gilbert. For a compound transaction, if an amount box does not require an entry, leave it blank.

a2. Journalize the entry to record the admission of Clarke.

b. What are the capital balances of each partner after the admission of the new partners?

Explanation / Answer

a1 Trent Henry, capital 38600 =193000/5 Tim Chou, Capital   34700 =138800/4       LeAnne Gilbert, Capital 73300 a2 Cash 47100      Becky Clarke, Capital   47100 b Partner Capital Balance Trent Henry 154400 =193000-38600 Tim Chou 104100 =138800-34700 LeAnne Gilbert 73300 Becky Clarke 47100

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