Robin,Cardinal, Jay are partners sharing profits and losses 30/30/40 respectively. Their capital balances are:

Robin $175,000

Cardinal $300,000

Jay $275,000

total $750,000

The old and partners agree that the assets are undervalued by $100,000.

a. Record the adjustment to the books before the new partner is admitted.

b. Assume sparrow invests in the partnership $250,000 and partners agree thereafter to share profits and losses equally. Record the entry of Sparrow using the bonus method whereby Sparrow receives 20% interest in the firm.