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   Admitting New Partner Who Contributes Assets

   After the tangible assets have been adjusted to current market prices, the capital accounts of Brad Paulson and Drew Webster have balances of $98,000 and $147,000, respectively. Austin Neel is to be admitted to the partnership, contributing $66,000 cash to the partnership, for which he is to receive an ownership equity of $86,000. All partners share equally in income.

   a. Journalize the entry to record the admission of Neel, who is to receive a bonus of $20,000. For a compound transaction, if an amount box does not require an entry, leave it blank.

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

   Partner	Balance
   Brad Paulson	$
   Drew Webster	$
   Austin Neel	$

   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 does not share in any gains or losses from changes in market prices to being admitted.

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