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Accounting: Admitting New Partner Who Contributes Assets

See attached "Word" file. Please do exercise in "Excel" file. Explain each step in simpliest form. Thank you.

After the tangible assets have been adjusted to current market prices, the capital accounts of Cecil Jacobs and Maria Estaban have balances of $61,000 and $59,000 respectively. Lee White is to be admitted to the partnership, contributing $45,000 cash to the partnership, for which she is to receive ownership equity of $55,000. All partners share equally in income.

(a) Journalize the entry to record the admission of White, who is to receive a bonus of $10,000.
(b) What are the capital balances of each partner after the admission of the new partner?

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Solution Preview

The details are in the excel file.

a. Journal Entry - Lee White contributes 45,000 and this is reflected as a debit to cash ( cash balances increases and hence a debit). Lee White will receive $55,000 in equity. This is reflected as a credit to Lee White equity Account ( equity increases and hence a credit). The ...

Solution Summary

The solution provides the journal entries to be made for admitting a new partner with bonus