On September 1, 2005, Fox & George LLP admitted Lucille Hayes to a 20% interest in net assets for an investment of $50,000 cash. Prior to the admission of Hayes, Fox & George LLP had net assets of $100,000 and an income-sharing ratio of Fox25%, George75%. After the admission of Hayes, the partnership contract included the following provisions:

Salary of $40,000 a year to Hayes

Remainder of net income in ratio Fox20%, George60%, Hayes20%

During the fiscal year ended August 31, 2006, Fox, George & Hayes LLP had net income of $90,000.

Prepare journal entries for Fox, George & Hayes LLP to record the admission of Hayes on September 1, 2005, and the division of income among the partners on August 31, 2006.

The following balance sheet is for Arch, Bole & Cusp LLP, whose partners share net income and losses in a 2:2:1 ratio, respectively:

Assets Liabilities & Partners' Capital

Cash $ 20,000 Liabilities $ 50,000

Other assets 180,000 Arch, Capital 37,000

Bole, Capital 65,000

________ Cusp, Capital 48,000

Total $200,000 Total $200,000