Tinkers, Evers and Chance are partners with capital balances of $75,000, $126,000, and $61,500, respectively on January 26, 2018. All nominal accounts have been adjusted and closed as of January 26, 2018. The partners share profits and losses according to the following percentages: 35% for Tinkers, 40% for Evers, and 25% for Chance. On January 26, 2018, Aparicio is to join the partnership upon contributing $67,500 in cash and some equipment with a book value of $14,500 and a fair value of $16,500 to the partnership, in exchange for a 20% interest in capital and a 20% interest in profits and losses. The existing assets of the original partnership are undervalued by $42,600, of which $31,500 relates to land and $11,100 relates to inventory. If necessary, the partnership will recognize goodwill. The original partners will share the balance of profits and losses in proportion to their original percentages.

REQUIRED:

1.Prepare the journal entries necessary to record the above events.

2. February 21, 2018

3. The partnership suffered a hurricane loss of $180,000. The partnership insurance policy includes a 15% deductible. How must of this loss should be absorbed by each partner.