Chapter s9 C. Repea pan B, escep t) Exercises h is ageed thar hor parposes of euabliching the imeres of the farmer partnens, the otlowing sdjuatimens dhal be made 1, An allowance for doubtful accounts of 2% of the acounts receivable is to be established. 2. The merchandise inventory is so be valued at $10,000 Accrued expenses of 5600 are to be recognized 4 Prepuid insurance is to be valued at $300 S. The goodwill method is to be used to recoed the admission of Mike. Required: Prepare the entries to adjust the account balances in establishing the interests of Bill and Jane and to recoed the investment by Mike EXERCISE 15.9 Partner Admission Lo Beth, Steph, and Linda have been operating a small gift shop for several years. After an extensive review of their past operating performance, the partners concluded that the basiness needed to expand in order to provide an de- quate return to the partners. The following balance sheet is for the partnership prior to the admission of a new partner, Mary $160,000 Cash 640,000 Other Assets $200,000 Liabilities Beth, Capital (40%) Steph, Capital (40%) Linda, Capital (20%) 265,000 215,000 Figures shown parenthetically reflect agreed profit-and-loss sharing percentages Required: Prepare the necessary journal entries to record the admission of Mary in each of the following independent ations. Some situations may be recorded in more than one way I. Mary is to invest sufficient cash to receive a one-sixth capital interest. The parties agree that the admiss to be recorded without recognizing goodwill or bonus 2. Mary is to invest $160,000 for a one-fifth capital interest. 3. Mary is to invest $160,000 for a one-fourth capital interest. 4. Mary is to invest $160.000 for a 40% capital interest. EXERCISE 15-10 Multiple Choice LO6 LO Select the best answer for each of the following