Problem 3 The Partnership of Peter, Steph, and Cherel concluded that the business needed to expand in order to provide an adequate return to the partners. The following balance sheet is for the partnership prior to the admission of a new partner, Tom, for a one-fourth interest in the capital and profits ofthe partnership. Cash $15,000 Other Assets 185,000 S200.000 Liabilities $50,000 Peter, Capital (50%) 75.000 Steph, Capital (30%) 50,000 Cherel, Capital (20%) 25.000 $200,000 The following proposals for Tom's admission were considered: 1. Tom would purchase one-half of Peter's capital and right to future profits directly from Peter for S60,000. 2. Tom would purchase one-quarter of each partner's capital and right to future profits by paying a total of S45,000 directly to the partners 3. Tom would invest s55,000 in the partnership for a 25% interest in capital and right. Future profits would be divided 37.5% 225%. 15%, and 25% for Peter, Steph, Chere and Tom respectively. Required: Prepare the necessary Journal entries to record the admission of Tom assuming that: 1. Partnership net assets are not to be revalued. 15-1