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Question - Red is interested in joining an existing magazine publishing partnership, presently owned by Black and White. Black and White each have equity in the partnership of $40,000 and $30,000 each. They agree to give Red a 25% interest in the company, in exchange for Red's investment of $30,000. Any "surplus and deficit" on admitting Red to the partnership will be split by Black and White in direct ratio to their capital accounts. Show the calculations to add Red to the partnership and the journal entry to record the transaction.
Financial Statement Analysis and Preparation
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