Admitting New Partner Who Contributes Assets

After the tangible assets have been adjusted to current market prices, the capital accounts of Grayson Jackson and Harry Barge have balances of $$110,000$ and $$165,000,$ respectively. Lewan Gorman is to be admitted to the partnership, contributing $$74,000$ cash to the partnership, for which he is to receive an ownership equity of $$96,000.$ All partners share equally in income.

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a$.$ Journalize the entry to record the admission of Gorman, who is to receive a bonus of $$22,000.$ If an amount box does not require an entry, leave it blank.

blank

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b$.$ What are the capital balances of each partner after the admission of the new partner?

Partner Balance

Grayson Jackson $fill in the blank $8$b$5116$ff$7$fe$003$d$\_1$

Harry Barge $fill in the blank $8$b$5116$ff$7$fe$003$d$\_2$

Lewan Gorman $fill in the blank $8$b$5116$ff$7$fe$003$d$\_3$

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c$.$ Why are tangible assets adjusted to current market prices prior to admitting a new partner?

Tangible assets should be adjusted to current market prices so that the new partner

any gains or losses from changes in market prices prior to being admitted. For example, if the market price of land doubled prior to admitting new partners,

should realize the increase in the value of the land in their capital accounts prior to the new partners$$ admission. Otherwise,

would share in the increase in the market value of the land.