Question

Admitting New Partners Myles Etter and Crystal Santori are partners who share in the income equally and have capital balances of $249,000 and $105,000, respectively. Etter, with the consent of Santori, sells one-third of her interest to Lonnie Davis. What entry is required by the partnership if the sales price is $70,000?

Answer 1

Answer:

Etter capital                           $83,000

Lonnie Davis capital                                   $83,000

Explanation:

Data provided in the question:

Capital balance of  Myles Etter = $249,000

Capital balance of  Crystal Santori = $105,000

Amount of interest sold by the Etter to Lonnie Davis = one-third

Sales price = $70,000

Now,

Required entry will be as follows

Etter capital                           $83,000

Lonnie Davis capital                                   $83,000

Here,

the cash will be directly received by the Etter not by the partnership

Hence,

It will have not effect on the entry.