Chapter 5
Partnerships
244
c) After Joe has left, Jack and John added Jim to the partnership on January 1, 2016. A
partnership with Jim will considerably increase the value of the business. Therefore, Jim
receives a $100,000 share of the business’ book value for an $80,000 investment. Calculate
the new capital balance for each partner after Joe has been withdrawn and Jim has been
added to the partnership.
Jack
John
Jim Total
d) Prepare the journal entry to record the admission of Jim from part c).
Date
Account Title and Explanation
Debit
Credit
e) Independent of part c), assume that Jim will receive a $100,000 share of the business’ book
value for a $130,000 investment. Calculate the new capital balance for each partner after
Joe has been withdrawn and Jim has been added to the partnership.
Jack
John
Jim Total
f ) Prepare the journal entry to record the admission of Jim from part e).
Date
Account Title and Explanation
Debit
Credit
