Reference no: EM132538023

Question - The capital balances of partners Eliza and Sara are k20600 and k14400 respectively before Ruth and tatty are claimed to the partnership. At admission Ruth purchased one third of Eliza's interest for k8000 and one third of Sara's interest for k4200. Tatty was admitted to the partnership with an investment of k8000. For which see is to receive ownership title of k8000.after a year of operations the partnership made an income of k7000 and the patners participation in net income was to be done under the following income ratios. Interest allowance of 30% annually on their salary allowance of k1600,k4000,k3000 and k2000 to Eliza, Sara and tatty respectively. Furthermore Eliza was entitled to a bonus of 10%if the difference between her salary allowance and net income is less than k5000 and the residual should shared at the ratio 3:2:2:2.

I. Journalize the entries for the admission of Ruth and tatty.

ii. Determine the capital balances of Eliza and Sara after submission of Ruth and tatty.

iii. Prepare the income sharing schedule and pass the necessary journal entry.