Question
In: Accounting
The capital accounts of Trent Henry and Tim Chou have balances of $147,400 and $92,600, respectively....
The capital accounts of Trent Henry and Tim Chou have balances of $147,400 and $92,600, respectively. LeAnne Gilbert and Becky Clarke are to be admitted to the partnership. Gilbert buys one-fifth of Henry’s interest for $27,400 and one-fourth of Chou’s interest for $19,000. Clarke contributes $75,000 cash to the partnership, for which she is to receive an ownership equity of $75,000.
| 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 exact wording of account titles. |
| B. | What are the capital balances of each partner after the admission of the new partners? |
Solutions
Expert Solution
A.
| Date | Account title and explanation | Debit | Credit |
| (1) Dec. 31 | Trent Henry, Capital (147,400/5) | 29,480 | |
| Tim Chou (92,600/4) | 23,150 | ||
| LeAnne Gilbert, Capital | 52,630 | ||
| (To record the admission of Gilbert) | |||
| (2) Dec. 31 | Cash | 75,000 | |
| Becky Clarke, Capital | 75,000 | ||
| (To record the admission of Clarke) |
B.
| Partner | Capital balance |
| Trent Henry (147,400-29,480) | 117,920 |
| Tim Chou (92,600-23,150) | 69,450 |
| LeAnne Gilbert | 52,630 |
| Becky Clarke | 75,000 |
ekkarill92 answered 3 hours agoRelated Solutions
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