After the tangible assets have been adjusted to current market prices, the capital accounts of Grayson Jackson and Harry Barge have balances of $64,900 and $86,500, respectively. Lewan Gorman is to be admitted to the partnership, contributing $43,300 cash to the partnership, for which he is to receive an ownership equity of $50,500. Al partners share equally in income. a. Journalize the entry to record the admission of Gorman, who is to receive a bonus of $7,200. If an amount box does not require an entry, leave it blank. BE b. What are the capital balances of each partner after the admission of the new partner? Partner Grayson Jackson Harry Barge Lewan Gorman $ $ Balance c. Why are tangible assets adjusted to current market prices prior to admitting a new partner? Tangible assets should be adjusted to current market prices so that the new partner admitted. For example, if the market price of land doubled prior to admitting new partners, por admiccion Otherwise any gains or losses from changes in market prices prior to being should realize the increase in the value of the land in would share in the increase in the market value of the land.

After the tangible assets have been adjusted to current market prices, the capital accounts of Grayson Jackson and Harry Barge have balances of $64,900 and $86,500, respectively. Lewan Gorman is to be admitted to the partnership, contributing $43,300 cash to the partnership, for which he is to receive an ownership equity of $50,500. Al partners share equally in income. a. Journalize the entry to record the admission of Gorman, who is to receive a bonus of $7,200. If an amount box does not require an entry, leave it blank. BE b. What are the capital balances of each partner after the admission of the new partner? Partner Grayson Jackson Harry Barge Lewan Gorman $ $ Balance c. Why are tangible assets adjusted to current market prices prior to admitting a new partner? Tangible assets should be adjusted to current market prices so that the new partner admitted. For example, if the market price of land doubled prior to admitting new partners, por admiccion Otherwise any gains or losses from changes in market prices prior to being should realize the increase in the value of the land in would share in the increase in the market value of the land.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Partnership Accounting

A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.

Partner Admission and Withdrawal

A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.

Question

After the tangible assets have been adjusted to current market prices, the capital accounts of Grayson Jackson and Harry Barge have balances of $64,900 and $86,500,
respectively. Lewan Gorman is to be admitted to the partnership, contributing $43,300 cash to the partnership, for which he is to receive an ownership equity of $50,500. All
partners share equally in income
a. Journalize the entry to record the admission of Gorman, who is to receive a bonus of $7,200. If an amount box does not require an entry, leave it blank.
b. What are the capital balances of each partner after the admission of the new partner?
Partner
Grayson Jackson
Harry Barge
Lewan Gorman
Balance
c. Why are tangible assets adjusted to current market prices prior to admitting a new partner?
Tangible assets should be adjusted to current market prices so that the new partner
admitted. For example, if the market price of land doubled prior to admitting new partners,
their capital accounts prior to the new partners' admission. Otherwise,
any gains or losses from changes in market prices prior to being
should realize the increase in the value of the land in
would share in the increase in the market value of the land.

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