Instructions - Admitting new partner with bonus

L. Bowers and V. Lipscomb are partners in Elegant Event Consultants. Bowers and Lipscomb share income equally. M. Ortiz will be admitted to the partnership. Prior to the admission, equipment was revalued downward by $8,000. The capital balances of each partner are $96,000 and $40,000, respectively, prior to the revaluation.

Required:

A.

On December 31, provide the journal entry for the asset revaluation. Refer to the Chart of Accounts for exact wording of account titles.

B.

On December 31, provide the journal entry for Ortizs admission under the following independent situations (refer to the Chart of Accounts for exact wording of account titles):

1.	Ortiz purchased a 20% interest for $20,000.
2.	Ortiz purchased a 30% interest for $60,000.

CHART OF ACCOUNTS

Elegant Event Consultants

General Ledger

	ASSETS
110	Cash
111	Petty Cash
112	Accounts Receivable
113	Allowance for Doubtful Accounts
114	Interest Receivable
115	Notes Receivable
116	Inventory
117	Office Supplies
118	Store Supplies
119	Prepaid Insurance
120	Land
123	Equipment
124	Accumulated Depreciation-Equipment
129	Asset Revaluations
133	Patent

	LIABILITIES
210	Accounts Payable
211	Salaries Payable
213	Sales Tax Payable
214	Interest Payable
215	Notes Payable

	EQUITY
310	L. Bowers, Capital
311	L. Bowers, Drawing
312	V. Lipscomb, Capital
313	V. Lipscomb, Drawing
314	M. Ortiz, Capital
315	M. Ortiz, Drawing
330	Income Summary

Refer to the Chart of Accounts for exact wording of account titles. Scroll down to access pages 10 and 11 of the journal.

A. On December 31, provide the journal entry for the asset revaluation.

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3

B. On December 31, provide the journal entry for Ortizs admission under the following independent situations:

1. Ortiz purchased a 20% interest for $20,000.

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3
4

Explanation

2. Ortiz purchased a 30% interest for $60,000.

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3
4