Musical instruments through partnership

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Paul and Ray sell musical instruments through their partnership. To bring in additional funds and expertise, they decide to admit Janet to the partnership. Paul's capital is $400,000, Ray's capital is $200,000, and they share income in a ratio of 7:3, respectively.

Required:

Record Janet's admission for each of the following independent situations:

a) Janet invests $180,000 for a one-fourth interest. Goodwill is to be recorded.

b) Paul and Ray agree that some of the inventory is obsolete. The inventory account is decreased before Janet is admitted. Janet invests $190,000 for a one-fourth interest.

Reference no: EM13121747

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