Ariel sole proprietor has been developing software for several types of computers. The business has the following account balances as of December 31, 2020: Cash 20,000, Equipment 180,000, Liabilities 100,000, Capital 100,000

Ariel needs additional assistance and has agreed to form a partnership with Brian. Brian will contribute $100,000 of equipment for a 50% capital interest. The partners agreed that profit/loss is to be shared based on capital balances.

At the end of the year, December 31, 2021, Cary was admitted to the partnership by investing $70,000 worth of equipment for a 20% capital interest.

On December 31, 2022, the partners decided to liquidate the business and the non-cash items were sold for $300,000. Profit/loss should be shared in the following way: Ariel 40%, Brian 40% and Cary 20%.

Required:

i. Journalize the formation of the partnership

ii. Calculate the amount of bonus paid/received by the new partner upon admission

iii. Journalize the admission of the new partnership

iv. Prepare a statement of partnership realization and liquidation