Bill and Jane share profits and losses in a 70:30 ratio. Mike is to be admitted into a partnership upon the investment of $14,000 for a one third capital interest. Account balances for Bill and Jane on June 30, 2024 just before the admission of Mike are as follows:

It is agreed that for purposes of establishing the interests of the former partners, the following adjustments shall be made:
1. An allowance for doubtful accounts of 2% of the accounts receivable is to be established.
2. The merchandise inventory is to be valued at $10,000.
3. Accrued expenses of $600 are to be recognized.
4. Prepaid insurance is to be valued at $300.
5. The bonus method is to be used to record the admission of Mike.

Required:
Prepare the entries to adjust the account balances in establishing the interests of Bill and Jane and to record the investment by Mike.

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Cash Accounts Receivable Notes Receivable Merchandise Inventory Prepaid Insurance Accounts Payable Bill, Capital Jane, Capital Debit $ 6,000 9,000 2,000 12,000 500 $29,500 Credit $ 9,500 12,000 8,000 $29,500