Kala and Leah, partners in Best Designs, have capital balances of $40,000 and $60,000, respectively. Adam joins the partnership by buying one-half of Kala's interest for $30,000. In addition, because of Adam's outstanding sales skills, the partners agree to increase his interest to 40% if he invests another $10,000. The income-sharing ratio of Kala, Leah, and Adam is 4:3:1.
(a)Journalize the entries to record the admission of Adam to the partnership.
(b)Immediately after Adam's admission to the partnership, Leah sells one-fourth of her interest to Denton for $35,000. Journalize the entry to record this transaction.

Question

Kala and Leah, partners in Best Designs, have capital balances of $40,000 and $60,000, respectively. Adam joins the partnership by buying one-half of Kala's interest for $30,000. In addition, because of Adam's outstanding sales skills, the partners agree to increase his interest to 40% if he invests another $10,000. The income-sharing ratio of Kala, Leah, and Adam is 4:3:1.​
(a)Journalize the entries to record the admission of Adam to the partnership.
(b)Immediately after Adam's admission to the partnership, Leah sells one-fourth of her interest to Denton for $35,000. Journalize the entry to record this transaction.

Quizplus · Accepted Answer

The Answer of Kala and Leah, partners in Best Designs, have capital balances of $40,000 and $60,000, respectively. Adam joins the partnership by buying one-half of Kala's interest for $30,000. In addition, because of Adam's outstanding sales skills, the partners agree to increase his interest to 40% if he invests another $10,000. The income-sharing ratio of Kala, Leah, and Adam is 4:3:1.​
(a)Journalize the entries to record the admission of Adam to the partnership.
(b)Immediately after Adam's admission to the partnership, Leah sells one-fourth of her interest to Denton for $35,000. Journalize the entry to record this transaction.

Kala and Leah, Partners in Best Designs, Have Capital Balances