Fred Wu and Hunter Thompson are partners in Technology Applications. The balances of their capital accounts on January 2, 2016, after revaluation of assets were Wu, $480,000, and Thompson, $640,000. Profits and losses are shared in the ratio of 55:45 between Wu and Thompson. The partners agree to admit William Monroe to the partnership, effective January 3, 2016.

Instructions

Give the entries in general journal form to record the admission of Monroe under each of the following independent conditions:

1. Wu sells one-half of his interest in the partnership to Monroe for $352,000 in cash.

2. Thompson sells one-half of his interest in the partnership to Monroe for $256,000 in cash.

3. Monroe invests $480,000 in the business for a one-fourth interest in the partnership.

4. Monroe invests $480,000 in the business for a 35 percent interest in the partnership.

Analyze: What percentage of partnership equity is owned by Wu and by Thompson after transaction 4?