Kala and Leah, partners in Best Designs, have capital balances of $40,000 and $60,000 respectively Adam joins the partnership by buying one half of Kalas interest for $30,000 In addition, because of Adams outstanding sales skills, the partners agree to increase his interest to 40 if he invests another $10,000 The income sharing ratio of Kala, Leah, and Adam is 4 3 1 Required (a) Journalize the entries to record the admission of Adam to the partnership (b) Immediately after Adams admission to the partnership, Leah sells one fourth of her interest to Denton for $35,000 Journalize the entry to record this transaction Refer to the Chart of Accounts for exact wording of account titles CHART OF ACCOUNTS General Ledger ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable 113 Allowance for Doubtful Accounts 114 Interest Receivable 115 Notes Receivable 116 Merchandise Inventory 117 Supplies 118 Prepaid Insurance 120 Land 123 Building 124 Accumulated Depreciation Building 125 Equipment 126 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 Kala, Capital 311 Kala, Drawing 312 Leah, Capital 313 Leah, Drawing 314 Adam, Capital 315 Adam, Drawing 316 Denton, Capital 317 Denton, Drawing 330 Income Summary REVENUE 410 Sales 610 Interest Revenue EXPENSES 511 Cost of Merchandise Sold 521 Salary Expense 531 Advertising Expense 532 Utilities Expense 533 Repairs Expense 534 Supplies Expense 535 Rent Expense 536 Insurance Expense 541 Bad Debt Expense 542 Credit Card Expense 543 Cash Short and Over 551 Depreciation Expense Building 553 Depreciation Expense Equipment 591 Miscellaneous Expense 710 Interest Expense Journalize the entries to record the admission of Adam to the partnership on December 31 Refer to the Chart of Accounts for exact wording of account titles PAGE 1 JOURNAL DATE DESCRIPTION POST REF DEBIT CREDIT 1 2 3 4 5 6 Immediately after Adams admission to the partnership, Leah sells one fourth of her interest to Denton for $35,000 on December 31 Journalize the entry to record this transaction Refer to the Chart of Accounts for exact wording of account titles PAGE 1 JOURNAL DATE DESCRIPTION POST REF DEBIT CREDIT 1 2

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jul 31, 2024

Kala and Leah, partners in Best Designs, have capital balances of $40,000 and $60,000 respectively. Adam joins the partnership by buying one-half of Kalas interest

Kala and Leah, partners in Best Designs, have capital balances of $40,000 and $60,000 respectively. Adam joins the partnership by buying one-half of Kalas interest for $30,000. In addition, because of Adams outstanding sales skills, the partners agree to increase his interest to 40% if he invests another $10,000. The income-sharing ratio of Kala, Leah, and Adam is 4:3:1. Required: (a) Journalize the entries to record the admission of Adam to the partnership.* (b) Immediately after Adams admission to the partnership, Leah sells one-fourth of her interest to Denton for $35,000. Journalize the entry to record this transaction.* *Refer to the Chart of Accounts for exact wording of account titles.

CHART OF ACCOUNTS

General Ledger

	ASSETS
110	Cash
111	Petty Cash
112	Accounts Receivable
113	Allowance for Doubtful Accounts
114	Interest Receivable
115	Notes Receivable
116	Merchandise Inventory
117	Supplies
118	Prepaid Insurance
120	Land
123	Building
124	Accumulated Depreciation-Building
125	Equipment
126	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	Kala, Capital
311	Kala, Drawing
312	Leah, Capital
313	Leah, Drawing
314	Adam, Capital
315	Adam, Drawing
316	Denton, Capital
317	Denton, Drawing
330	Income Summary

	REVENUE
410	Sales
610	Interest Revenue

	EXPENSES
511	Cost of Merchandise Sold
521	Salary Expense
531	Advertising Expense
532	Utilities Expense
533	Repairs Expense
534	Supplies Expense
535	Rent Expense
536	Insurance Expense
541	Bad Debt Expense
542	Credit Card Expense
543	Cash Short and Over
551	Depreciation Expense-Building
553	Depreciation Expense-Equipment
591	Miscellaneous Expense
710	Interest Expense

Journalize the entries to record the admission of Adam to the partnership on December 31. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 1

JOURNAL

DATE

DESCRIPTION

POST. REF.

DEBIT

CREDIT

Immediately after Adams admission to the partnership, Leah sells one-fourth of her interest to Denton for $35,000 on December 31. Journalize the entry to record this transaction. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 1

JOURNAL