Partnership Accounting: I need some help with this problem please

Feb 26, 2015
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Partnership Accounting Problem: Admission by Investment of Assets?
Hi there. Good Day, I'm in need of help with this problem. I'm most confused how I should restate the assets and liabilities. :(

Jane and Jessie are partners sharing profits in a 60:40 ratio. A statement of financial position prepared for the partners on April 1, 2015 as follows:

Cash 480,000
Accounts Receivable 920,000
Inventories 1,650,000
Equipment 700,000
Accumulated Depreciation (450,000)
Total Assets 3,300,000

Accounts Payable 890,000
Jane, Capital 1,330,000
Jessie, Capital 1,080,000
Total Liabilities and Capital 3,300,000

On this date, the partners agreed to admit Tria as a partner. The terms of the agreement are summarize below:

Assets and Liabilities are to be restated as follows:

a. An allowance for possible uncollectibles of 45,000 is to be established.
b. Inventories are to be restated at their present replacement value of 1,700,000.
c. Accrued expenses of 40,000 are to be recognized.

Jane, Jessie and Tria will divide profits in the ratio of 5:3:2. Capital balances of the partners after the formation of the new partnership are to be in the stated ratio, with Jane and Jessie making cash settlement between themselves outside of the partnership to adjust their capitals, and Tria investing cash in the partnership for his interest. Determine how much cash is to be invested by Tria.

Thank you very much!!

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