Thomas Richey and Donald Vick are partners who share profits and losses in the ratio of 40:60, respectively. On December 31, 2016, they decide that Vick will sell one-half of his interest to James Walker. At that time, the balances of the capital accounts are $260,000 for Richey and $360,000 for Vick. The partners agree that before the new partner is admitted, certain assets should be revalued. These assets include merchandise inventory carried at $206,600 revalued at $203,800, and a building with a book value of $140,000 revalued at $240,000.
1. Record the revaluations in the general journal.
2. What will the capital balances of the two existing partners be after the revaluation is made?