Chapter 12, Problem E12.19E

To determine

Admission of New Partner: Whenever a new partner is admitted in to the partnership the old partnership dissolves and a new partnership begins. A person may enter into partnership by purchasing the old partner’s interest or may enter by investing in the partnership firm.

To Determine:

1. Calculate Partner’s equity on the books of new partnership under conditions given:

a. Hylands pays $100,000 for Nole’s equity and Hylands pays Nole directly.

b. Hylands contributes $90,000 to acquire a ¼ interest in the partnership.

c. Hylands contributes $135,000 to acquire a ¼ interest in the partnership.

2. Journal Entries for admitting the new partner under plans a, b, and c given above as per US GAAP.