Reference no: EM133122087

Question - On December 31?, 2020?, Jim Aybar and Mike Manning agree to combine their sole proprietorships into a partnership. Their balance sheets on December 31 are shown as? follows:

	Aybar's Business		Manning's Business
Assets	Book Value	Current Market Value	Book Value	Current Market Value
Cash	$33,000	$33,000	$28,000	$28,000
Accounts receivable (net)	113,000	103,000	43,000	38,000
Inventory	258,000	233,000	173,000	183,000
Equipment (net)	616,000	531,000	276,000	306,000
Total Assets	$1,020,000	$900,000	$520,000	$555,000
Liabilities and Owner's Equity
Accounts payable	$124,000	$124,000	$51,000	$51,000
Accrued expenses payable	14,500	14,500	14,500	14,500
Notes payable	274,000	274,000
Jim Aybar, capital	607,500	487,500
Mike Manning, capital			454,500	489,500
Total liabilities and equity	$1,020,000	$900,000	$520,000	$555,000

Required -

1. Prepare the partnership balance sheet at December 31, 2020, in report format using two columns.

2. Assume John Akers wants to join the partnership by paying $226,000 for a 1/4 interest. The partnership equity before John joins is $977,000, and Jim Aybar and Mike Manning shared profits 40 percent for Austin and 60 percent for Manning. Prepare the journal entry to record Akers's admission to the partnership on January 1, 2021.

3. What percentage of the profits will John Akers receive after becoming a partner?