Reference no: EM132969093
Question - Ben and Bob are partners in a business selling sportswear and equipment which they organized in 2015. Profits are shared in the ratio of 1:1, respectively. Their capital balances as of December 31, 2017 were 240,000 and 260,000, respectively. Drawing accounts are always closed yearly to the capital accounts. They agreed to admit Ted upon payment of 150,000 for a 50% interest from Ben on July 1, 2018. Before admission they agreed to update their capital accounts for the following:
a. Net income of 250,000 for the first half of 2018
b. Monthly salary drawings of 10,000 and 20,000 were made by Ben and Bob
c. Revalue equipments acquired at a cost of 200,000, book value of 180,000 and a fair market value equal to 75% of its book value
Required -
a. Prepare the table revising partners' equity for revaluation and equity transfer
b. Record profit share, asset revaluation, and close to the capital the drawings they made?
c. Based on the updated capital accounts of the existing partners record the admission of Ted?
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