asearch Show Me How Admitting New Partners who Buy an Interest and Contribube As
ID: 2608154 • Letter: A
Question
asearch Show Me How Admitting New Partners who Buy an Interest and Contribube Assets The capital accounts of Trent Henry and Tim Chou have balances of $173,000 and $124,400, respectively,LeAnne Gilbert and Becky Clarke are to be admitted to the patrern. Gbet buys one-rth of Henry, rterest fr S39,000 and nefouth of Chou's interest for S27,400, Orte cotbtes S42,20 to the parte hip, fr she is to receive an ownership equity of $42,200 1. Jounalize the entry to record the admission of Gibert, For a compound transaction, r an amount box does not requivenry, a2. Jourmalure t the entry to necord the admission of clarke the capital balances or the admission of the new patners? Capital Belianee Tm Chou eknne GibertExplanation / Answer
Solution a1:
Captial balance of trent henry before admission of Gilbert and clarke = $173,000
Captial balance of tim chou before admission of Gilbert and clarke = $124,400
Now gilbert acquired one fifth share of henry for $39,800, it means Gilbert will pay $39,800 directly to henry for captial of $34,600 ($173,000/5) in partnership.
further gilbert acquired one fourth share of chou for $27,400, it means Gilbert will pay $27,400 directly to chou for captial of $31,100 ($124,400/4) in partnership
Solution a2:
Clarke contributed cash of $42,200 in partnership for ownership equity of $42,200.
Solution b:
Captial balances of partners after admission of gilbert and clarke:
Trent henry capital balance = $173,000 - $34,600 = $$138,400
Tim Chou Capital balance = $124,400 - $31,100 = $93,300
Gilbert capital balance = $34,600 + $31,100 = $65,700
Clarke capital balance = $42,200
Journal Entry Particulars Debit Credit Trent Henry Capital A/c Dr $34,600.00 Tim Chou Capital A/c Dr $31,100.00 To Gilbert capital A/c $65,700.00Related Questions
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