A condensed balance sheet for the Peter, Quarry, and Sherel partnership at December 31, 2011, and their profit and loss sharing percentages on that date are as follows:

On January 1, 2012, the partners decided to bring Tom into the partnership for a one-fourth interest in the capital and profits of the partnership. The following proposals for Tom's admittance into the partnership were considered:1. Tom would purchase one-half of Peter's capital and right to future profits directly from Peter for $60,000.2. Tom would purchase one-fourth of each partner's capital and rights to future profits by paying a total of $45,000 directly to the partners.3. Tom would invest $55,000 cash in the partnership for a 25% interest in capital. Future profits would be divided 37.5 percent, 22.5 percent, 15 percent, and 25 percent for Peter, Quarry, Sherel, and Tom, respectively.REQUIRED: Prepare journal entries with supporting computations to show Tom's admittance into the partnership under each of the above proposals assuming that:1. Partnership net assets are not to be revalued2. Partnership net assets are to berevalued

Transcribed Image Text:

Condensed Balance Sheet at December 31, 2011 Cash Other assets Total assets $ 15,000 Liabilities Peter capital (50%) Quarry capital (30%) Sherel capital (20%) Total liabilities and $ 50,000 185,000 $200,000 25,000 $200,000 capital