Question

The capital accounts of Trent Henry and Tim Chou have balances of $146,000 and $93,800, respectively....

The capital accounts of Trent Henry and Tim Chou have balances of $146,000 and $93,800, respectively. LeAnne Gilbert and Becky Clarke are to be admitted to the partnership. Gilbert buys one-fifth of Henry’s interest for $29,100 and one-fourth of Chou’s interest for $21,300. Clarke contributes $69,400 cash to the partnership, for which she is to receive an ownership equity of $69,400.

Required:
A. On December 31, journalize the entries to record the admission of (1) Gilbert and (2) Clarke. Refer to the Chart of Accounts for exact wording of account titles.
B. What are the capital balances of each partner after the admission of the new partners?

X

Chart of Accounts

CHART OF ACCOUNTS
Henry, Chou, Gilbert, and Clarke
General Ledger
ASSETS
110 Cash
111 Petty Cash
112 Accounts Receivable
113 Allowance for Doubtful Accounts
114 Interest Receivable
115 Notes Receivable
116 Inventory
117 Office Supplies
118 Store Supplies
119 Prepaid Insurance
120 Land
123 Equipment
124 Accumulated Depreciation-Equipment
129 Asset Revaluations
133 Patent
LIABILITIES
210 Accounts Payable
211 Salaries Payable
213 Sales Tax Payable
214 Interest Payable
215 Notes Payable
EQUITY
310 Trent Henry, Capital
311 Trent Henry, Drawing
312 Tim Chou, Capital
313 Tim Chou, Drawing
314 LeAnne Gilbert, Capital
315 LeAnne Gilbert, Drawing
316 Becky Clarke, Capital
317 Becky Clarke, Drawing
REVENUE
410 Sales
610 Interest Revenue
EXPENSES
510 Cost of Merchandise Sold
520 Salaries Expense
521 Advertising Expense
522 Depreciation Expense-Equipment
523 Delivery Expense
524 Repairs Expense
529 Selling Expenses
531 Rent Expense
533 Insurance Expense
534 Office Supplies Expense
535 Store Supplies Expense
536 Credit Card Expense
537 Cash Short and Over
538 Bad Debt Expense
539 Miscellaneous Expense
710 Interest Expense

X

Journal

A. On December 31, journalize the entries to record the admission of (1) Gilbert and (2) Clarke. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 10

JOURNAL

ACCOUNTING EQUATION

DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY

1

2

3

4

5

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

Partner Capital Balance
Trent Henry, Capital
Tim Chou, Capital
LeAnne Gilbert, Capital
Becky Clarke, Capital
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Homework Answers

Answer #1
Date Description Post. Ref. Debit Credit Assets Liabilities Equity
December 31 Trent Henry, Capital 29200 ↓ =146000*1/5
Tim Chou, Capital 23450 ↓ =93800*1/4
      LeAnne Gilbert, Capital 52650 ↑
December 31 Cash 69400 ↑
      Becky Clarke, Capital 69400 ↑
B
Partner Capital Balance
Trent Henry, Capital 116800 =146000-29200
Tim Chou, Capital 70350 =93800-23450
LeAnne Gilbert, Capital 52650
Becky Clarke, Capital 69400
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