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Prepare the journal entry necessary to record transaction

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Question - Liza is admitted into the partnership for a 50% interest in the profits and losses of the partnership. The old partners Maria, Leonora and Theresa are to retain their original capital and profit-sharing relationships to each other and are to transfer sufficient amount (50%) of their own capital accounts to Liza to accomplish his admission as planned. O agreed to pay 50,000 to Maria, Leonora and Theresa. The capital balances of Maria, Leonora and Theresa before Liza admission are 20,000, 20,000 and 30,000, respectively. Profit and Loss ratio of Maria, Leonora and Theresa are 20:30:50 respectively.

Required -

A. Prepare the journal entry necessary to record this transaction.

B. How should the 50,000 cash be divided to Maria, Leonora and Theresa?

Reference no: EM132948842

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