On December 31, 2020, Jim Austin and Mike Mundy agree to combine their proprietorships as a partnership. Their balance sheets on December 31 are as follows:

Required

1. Prepare the partnership balance sheet at December 31, 2020, in report format using two columns.

2. Assume John Allen wants to join the partnership by paying $212,000 for a 1/4 interest. The partnership equity before John joins is $960,000, and Jim Austin and Mike Mundy shared profits 60 percent for Austin and 40 percent for Mundy. Prepare the journal entry to record Allen’s admission to the partnership on January 1, 2021. 

3. What percentage of the profits will John Allen receive after becoming a partner?

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Austin's Business Mundy's Business Вook Value Market Value Book Value Market Value Current Current Assets Cash $ 30,000 $ 30,000 $ 25,000 $ 25,000 Accounts receivable (net) 110,000 100,000 40,000 35,000 Inventory 255,000 230,000 170,000 180,000 Equipment (net) 610,000 525,000 270,000 300,000 Total assets $1,005,000 $885,000 $505,000 $540,000 Liabilities and Equity Accounts payable $ 120,000 $120,000 $ 50,000 $ 50,000 Accrued expenses payable 10,000 10,000 10,000 10,000 Notes payable 275,000 275,000 Jim Austin, capital 600,000 480,000 Mike Mundy, capital Total liabilities and equity 445,000 480,000 $1,005,000 $885,000 $505,000 $540,000