Accounting for the admission of a new partner
Hayley Hollis is admitted to the partnership of Rose & Novak. Prior to her admission, the partnership books show Greta Rose's capital balance at $170,000 and Chris Novak's at $85,000.
Requirements
1. Compute each partner's equity on the books of the new partnership under the following plans:
a. Hollis pays $95,000 for Novak's equity. Hollis pays Novak directly.
b. Hollis invests $85,000 to acquire a 1/4 interest in the partnership.
c. Hollis invests $105,000 to acquire a 1/4 interest in the partnership.
2. Make the journal entries for admitting the partner under plans a, b, and c.