Reference no: EM132761881

Carrots joins the partnership of Apple and Banana. Before the admission of Carrots, the partnership statement of financial position shows the following information:

Cash 30,000

Accounts receivable 140,000

Inventory 200,000

Equipment 500,000

Total assets 870,000

Accounts payable 80,000

Apple, Capital (60%) 515,000

Banana, Capital (40%) 275,000

Total liabilities and equity 870,000

The following adjustments are determined:

a. The recoverable amount of the accounts receivable is ?120,000.

b. The inventory has a net realizable value of ?160,000.

c. The equipment has a fair value of ?450,000. d. Unrecorded liabilities amount to ?20,000.

Case #1: Carrots acquires half of Banana's interest for ?800,000.

Requirements:

Problem a. Provide the entry to record the admission of Carrots.

Problem b. Determine the balances of the partners' capital accounts after the admission of Carrots.

Problem c. Determine the profit or loss sharing ratio of the partners after the admission of Carrots.