The capital accounts of the Fax and Bel partnership on September 30, 2011, were: Fax capital (75%

Question:

The capital accounts of the Fax and Bel on September 30, 2011, were:
Fax capital (75% profit percentage) ... $140,000
Bel capital (25% profit percentage) ... 60,000
Total capital ............ $200,000
On October 1, Rob was admitted to a 40 percent interest in the when he purchased 40 percent of each existing partner’s capital for $120,000, paid directly to Fax and Bel.
REQUIRED
1. Determine the capital balances of Fax, Bel, and Rob after Rob’s admission to the if is not recorded.
2. Determine the capital balances of Fax, Bel, and Rob after Rob’s admission to the if is recorded, assuming that the book value and fair value of recorded assets are equal.

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