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After the tangible assets have been adjusted to current market prices, the capital accounts of Brad Paulson and Drew Webster have balances of $45,000 and
After the tangible assets have been adjusted to current market prices, the capital accounts of Brad Paulson and Drew Webster have balances of $45,000 and $60,000, respectively. Austin Neel is to be admitted to the partnership, contributing $30,000 cash to the partnership, for which he is to receive an ownership equity of $35,000. All partners share equally in income
A. | On December 31, journalize the entry to record the admission of Neel, who is to receive a bonus of $5,000. Refer to the Chart of Accounts for exact wording of account titles. |
B. | What are the capital balances of each partner after the admission of the new partner? |
C. | Why are tangible assets adjusted to current market prices, prior to admitting a new partner? |
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