Problem: Ruth and Bob decide to form a partnership along with Tribbs Holding Company to purchase an office building. They give you the following facts:
- Tribbs invested $45,000 and is a limited partner. Tribbs receives interest at 6% on its investment.
- Ruth provides $35,000 in computer equipment as a limited partner.
- Bob provides $15,000 as the general partner and receives a salary of $15,000 per year.
- Profits during the year are $60,000 after all expenses.
- At the end of the year, Ruth retires from the partnership. The partnership pays her $50,000. Profit allocation is 45% for Tribbs, 30% for Ruth, and 25% for Bob.
- After Ruth retires, the partnership admits Paul who invests $50,000 and will receive 30% of the partnership's gains and losses.
- Using a worksheet, calculate the partners' balances once Paul is admitted and make the journal entries to update the books.