asearch Show Me How Admitting New Partners who Buy an Intere

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 Gibert

Solution

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		$65,700.00