Question

The capital accounts of Trent Henry and Tim Chou have balances of $142,900 and $85,800, respectively. LeAnne Gilbert and Becky Clarke are to be admitted to the partnership. Gilbert buys one-fifth of Henry’s interest for $31,400 and one-fourth of Chou’s interest for $20,200. Clarke contributes $74,500 cash to the partnership, for which she is to receive an ownership equity of $74,500. Required: a. On December 31, journalize the entries to record the admission of (1) Gilbert and (2) Clarke. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. b. What are the capital balances of each partner after the admission of the new partners?

Answer 1

Date	General Journal	Debit	Credit
A1	Trent Henry, Capital (142900*1/5)	28,580
	Tim Chou, Capital (85800*1/4)	21,450
	LeAnne Gilbert, Capital		50,030
	( To record the admission of Gilbert.)
A2	Cash	74,500
	Becky Clarke, Capital		74,500
	(To record the admission of Clarke.)

Part 2

Partner	Capital Balance
Trent Henry, Capital (142900-28580)	114,320
Tim Chou, Capital (85800-21450)	64,350
LeAnne Gilbert, Capital	50,030
Becky Clarke, Capital	74,500
Total capital balance	303,200