Accounting 26th Edition by Carl Warren ,Jim Reeve ,Jonathan Duchac

Exercise 31

Admitting new partner who contributes assets
After the tangible assets have been adjusted to current market prices, the capital accounts of Brad Paulson and Drew Webster have balances of $45,000 and $60,000, respectively. Austin Neel is to be admitted to the partnership, contributing $30,000 cash to the partnership, for which he is to receive an ownership equity of $35,000. All partners share equally in income.
a. Journalize the entry to record the admission of Neel, who is to receive a bonus of $5,000.
b. What are the capital balances of each partner after the admission of the new partner
c. Why are tangible assets adjusted to current market prices prior to admitting a new partner