Tommy Riley and Derrick Victor are partners who share profits and losses in the ratio of 40:60, respectively. On December 31, 2019, they decide that Victor will sell one-half of his interest to John Lynch. At that time, the balances of the capital accounts are $130,000 for Riley and $180,000 for Victor. The partners agree that before the new partner is admitted, certain assets should be revalued. These assets include merchandise inventory carried at $103,300, revalued at $101,900, and a building with a book value of $70,000, revalued at $140,000.
1. Record the revaluations in the general journal.
2. What will the capital balances of the two existing partners be after the revaluation is made?