Question - The Sam and Kyle Partnership has partner capital account balances as follows:
Sam, Capital $350,000
Kyle, Capital 450,000
The partners share income and losses in the ratio of 70% to Sam and 30% to Kyle.
Instructions
Prepare the journal entry on the books of the partnership to record the admission of Liam as a new partner under the two independent circumstances.
1. Liam pays $200,000 to Sam and $250,000 to Kyle for one-half of each of their ownership interest in a personal transaction.
2. Liam invests $700,000 in the partnership for a one-third interest in partnership capital.