Demarco Lee invested $60,000 in the Camden and Sayler partnership for ownership equity of $60,000. Prior to the investment, equipment was revalued to a market value of $39,000 from a book value of $30,000. Kevin Camden and Chloe Sayler share net income in a 2:1 ratio.
a. Provide the journal entry for the revaluation of equipment.
b. Provide the journal entry to admit Lee.
Answer:
a.
Equipment 9,000
Kevin Camden, Capital 6,000
Chloe Sayler, Capital 3,000
($39,000 – $30,000) × 2/3.
b.
Cash 60,000
Demarco Lee, Capital 60,000
