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Required information Skip to question [The following information applies to the questions displayed below.] Pam and John are partners in the PJs partnership sharing income

Required information

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[The following information applies to the questions displayed below.]

Pam and John are partners in the PJs partnership sharing income in a ratio of 3:1. Gerry is to be admitted into the partnership with a 20 percent interest in the business.

Pam $ 120,000
John 40,000

Required:

Prepare journal entries to record Gerrys admission into the partnership for each of the following independent situations.

f. Gerry invests $35,000. During the valuation process made as part of admitting the new partner, the partnerships inventory is determined to be overvalued by $20,000 because of obsolescence. PJs partnership uses the lower-of-cost-or-market value method for inventories.

Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.

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