Chapter 5
Partnerships
229
b) Prepare the journal entry to record the admission of Sharon from part a).
Date
Account Title and Explanation
Debit
Credit
c) Consider this independent scenario. S3 Beauty has made a good reputation for itself in the
market and has a large base of loyal customers. Since the company has a higher market
value, Sharon has agreed to invest $390,000 into the business and receive a $300,000
share of the business’ book value. Any difference is split equally among the original
partners. Calculate the new capital balance for each partner after Sharon has been added
to the partnership.
Sylvia Sonia Sana Sharon Total
d) Prepare the journal entry to record the admission of Sharon from part c).
Date
Account Title and Explanation
Debit
Credit
e) Consider this independent scenario. S3 Beauty has made a good reputation for itself in the
market and has a large base of loyal customers. Since a partnership with Sharon will be
very beneficial for S3 Beauty, S3 Beauty will provide Sharon with a $300,000 share of the
business’ book value for a $285,000 investment. Any difference is split equally among the
original partners. Calculate the new capital balance for each partner after Sharon has been
added to the partnership.
Sylvia Sonia Sana Sharon Total
