1. Robin,Cardinal, Jay are partners sharing profits and losses 30/30/40 respectively. Their capital balances are:

Robin $175,000

Cardinal $300,000

Jay $275,000

total $750,000

The old and partners agree that the assets are undervalued by $100,000.

a. Record the adjustment to the books before the new partner is admitted.

b. Assume sparrow invests in the partnership $250,000 and partners agree thereafter to share profits and losses equally. Record the entry of Sparrow using the bonus method whereby Sparrow receives 20% interest in the firm.

c. Assume, instead Sparrow puts into the partnership $350,000 of cash and is awarded a 50% interest. Record the entry of sparrow using the goodwill method.

d. In the first year after Sparrow's entrance under the conditions outlined in part "c" above, an agreement was made amending the sharing of profits and losses, whereby Jay gets a salary of $40,000, and each partner receives 10% interest on their beginning capital balances with the remainder shared equally. Unfortunately, the amendment was never written down and the partners are in dispute over this arrangement. The partnership lost $400,000.

Prepare a schedule showing how the loss will be shared.