1.Janice Knowles (JK) and Mary Norman (MN) are partners who share income and los

Question

1.Janice Knowles (JK) and Mary Norman (MN) are partners who share income and losses in the ratio of 3:2, respectively. On May 31, their capital balances were: JK $220,000 and MN $150,000. On that date, they agree to admit Samuel Torres (ST) as a partner with a one quarter (1/4) capital interest. ST invests $180,000 in the partnership: a. What is JK's capital balance after STs admittance? b. What is MN's capital balance after ST's admittance c. What capital amount is recorded for ST 2. Crystal and Nancy have partnership capital balances of $350,000 and $325,000, respectively. Nancy negotiates to sell her partnership interest to Jessica for $395,000. Crystal agrees to accept Jessica as a new partner. a. Prepare the partnership journal entry to record this transaction. 3. Mr. Meekes, Mr. Kadeem, and Ms. Roberts agreed to form the Engineering Redesign Partnership. Mr. Meekes agreed to contribute $90,000 cash to the partnership. Mr. Kadeem contributes equipment valued at $5,000 and a building with a fair value of $102,000. Ms. Roberts transfers to

Explanation / Answer

ST share =1/4

Remaining share=1-1/4=3/4

3/4 will be shared by the existing partners

3/4*3/5=9/20=JK's share

3/4*2/5=6/20=MN's share

so the final ratio will be

9/20:6/20:1/4

or

9/20:6/20:5/20

or

9:6:5

new partner share is 1/ 4 for which he brings 180000

total capital will be 180000*4=720000

JK's capital =720000*9/20=324000

MN's capital=720000*6/20=216000

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