On January 31, 2005, partners of Lon, Mac & Nan LLP had the following loan and capital account balances (after closing entries for January):

The partnership’s income-sharing ratio was Lon, 50%; Mac, 20%; and Nan, 30%.
On January 31, 2005, Ole was admitted to the partnership for a 20% interest in total capital of the partnership in exchange for an investment of $40,000 cash. Prior to Ole’s admission, the existing partners agreed to increase the carrying amount of the partnership’s inventories to current fair value, a $60,000 increase.
Prepare journal entries on January 31, 2005, for Lon, Mac, Nan & Ole LLP to record the $60,000 increase in the partnership’s inventories and the admission of Ole for a $40,000 cash investment.

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Loan receivable from Lon Loan payable to Nan Lon, Capital Mac, Capital Nan, Capital $ 20,000 dr 60,000 cr 30,000 dr 120,000 cr 70,000 cr