Account Titles and explanation | Debit | Credit |
Cash | 56,000 | |
Brad Paulson, Capital [73000-56000]*1/2 |
8500 | |
Drew Webster, Capital | 8500 | |
Austin Neel , Capital | 73,000 |
Capital balances | ||
Brad Paulson, Capital | 75500 | [84000-8500] |
Drew Webster, Capital | 117500 | [126000-8500] |
Austin Neel , Capital | 73000 |
Tangible assets should be adjusted to current market prices so that the new partner does not share any gains or losses from changes in market prices prior to being admitted. For example, if the market price of land doubled prior to admitting new partners, the existing partners should realize the increase in the value of the land in their capital accounts prior to the new partners’ admission. Otherwise,the new partner would share in the increase in the market value of the land.
Get Answers For Free
Most questions answered within 1 hours.