= P 16-7 Recording new partner investment and subsequent balance sheet The partnership of Add and Bal is adding a new partner, Cat, and its assets and equities at book value and fair value just prior to her admission to the partnership on January 1, 2016, are as follows: Assets Cash Accounts receivable-net Inventories Plant assets-net Equities Accounts payable 15% note payable Add capital (60%) Bal capital (40%) Back to Page Book Value $15,000 45,000 Fair Value $15,000 40,000 60,000 50,000 90,000 105,000 $200,000 $220,000 $30,000 $30,000 50,000 64,000 56,000 $200,000 40,000 < 538 1772 > On January 2, 2016, Add and Bal take Cat into the partnership of Add, Bal, and Cat for a 40 percent interest in capital and profits. Back to Page Required 1. Prepare journal entries for the admission of Cat into the partnership for an investment of $160,000 assuming that assets (including any goodwill) are revalued. 2. Prepare a balance sheet for the Add, Bal, and Cat partnership on January 2, 2016, just after the admission of Cat. < 538 /772 >