Compute each partners equity on the books

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Accounting for the admission of a new partner

Hayley Hollis is admitted to the partnership of Rose & Novak. Prior to her admission, the partnership books show Greta Rose's capital balance at $170,000 and Chris Novak's at $85,000.

Requirements

1. Compute each partner's equity on the books of the new partnership under the following plans:

a. Hollis pays $95,000 for Novak's equity. Hollis pays Novak directly.

b. Hollis invests $85,000 to acquire a 1/4 interest in the partnership.

c. Hollis invests $105,000 to acquire a 1/4 interest in the partnership.

2. Make the journal entries for admitting the partner under plans a, b, and c.

Reference no: EM13527417

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