Hadley Harris is admitted to the partnership of Reamey & Nedia. Prior to her admission, the partnership books show Gabby Reamey's capital balance at $100,000 and Carlos Nedia's at $50,000. Assume Reamey and Nedia share profits and losses equally.
Requirements
1. Compute each partner's equity on the books of the new partnership under the following plans:
a. Harris pays $85,000 for Nedia's equity. Harris pays Nedia directly.
b. Harris contributes $50,000 to acquire a 1/4 interest in the partnership.
c. Harris contributes $60,000 to acquire a 1/4 interest in the partnership.
2. Journalize the entries for admitting the new partner under plans a, b, and c.