After the tangible assets have been adjusted to current market prices, the capit

Question

After the tangible assets have been adjusted to current market prices, the capital accounts of Harper and Kahlil have balances of $60,000 and $90,000 , respectively. Fay is to be admitted to the partnership, contributing $45,000 cash, for which she is to receive an ownership equity of 60,000. All partners share equally in income. (1) Jounalize the entry to record the admission of Fay, who is to receive a bonus of $15,000. (2) What are the capital balances of each partner after the admission of the new partner. (2) What are the capital balances of each partner after the admission of the new partner?

Explanation / Answer

1) Journal Entry

Bank A/c Dr $45000

Goodwill A/c Dr $15000

To Fay's Capital A/c $60000

( Being Capital introduce by fay)

Harper A/c Dr $7500

kahlil A/c Dr $7500

To Goodwill A/c $15000

( Being Goodwill w/off)

2) The capital Balance of each partner after the admission will be

Harper's capital = $52500

Kahlil's capital = $82500

Fay's capital = $60000

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