Amar Harb purchased one-half of Jordan Henry’s interest in the Vale and Henry partnership for $29,000. Prior to the investment

Amar Harb purchased one-half of Jordan Henry’s interest in the Vale and Henry partnership for $29,000. Prior to the investment, land was revalued to a market value of $125,000 from a book value of $80,000. Tony Vale and Jordan Henry share net income equally. Henry had a capital balance of $30,000 prior to these transactions.

a. Provide the journal entry for the revaluation of land.
b. Provide the journal entry to admit Harb.


Answer:












a.
 Land 45,000
Tony Vale, Capital 22,500
Jordan Henry, Capital 22,500
($125,000 – $80,000) × 50%.
b.
 Jordan Henry, Capital 26,250
Amar Harb, Capital 26,250
($30,000 + $22,500) × 50%.



Austin Fisher contributed land, inventory, and $36,000 cash to a partnership. The land had a book value of $120,000 and a market value of $175,000. The inventory had a book value of $50,000 and a market value of $42,000. The partnership also assumed a $35,000 note payable owed by Fisher that was used originally to purchase the land. Provide the journal entry for Fisher’s contribution to the partnership.


Answer:









Cash 36,000
Inventory 42,000
Land 175,000
Notes Payable 35,000
Austin Fisher, Capital 218,000