Answer to Question #313248 in Finance for Zian

Question

The capital accounts of Loida Cardenas and Christian San Jose have balances of P150,000 and P110,000, respectively. Daria Labalan and Helen Magada are to be admitted to the partnership. Labalan buys one-fifth of Cardenas'interest for P35,000 and one-fourth of San Jose's interest for P25,000. Magada contributes P70,000 cash to the partnership, for which she is to receive ownership equity of P70,000.

Required:

1. Journalize the entries to record the admission of Labalan and Magada.

2. What are the capital balances of each partner after the admission of the new partners?

Answer 1

1.

Debit own shares and shares Credit Settlements with founders - 35000

Debit own shares and shares Credit Settlements with founders - 25000

Debit cash desk Credit Settlements with founders - 70000

2.