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Nancy Conradt and Chris Russell Are Partners Who Share Profits

question 62

Essay

Nancy Conradt and Chris Russell are partners who share profits and losses in the ratio of 60:40,respectively.On December 31,2016,they decide that Russell will sell one-half of his interest to Pam Ortega.At that time,the balances of the capital accounts are $500,000 for Conradt and $700,000 for Russell.The partners agree that before the new partner is admitted,certain assets should be revalued.These assets include merchandise inventory carried at $411,200 revalued at $403,600,and a building with a book value of $260,000 revalued at $450,000.On page 10 of a general journal,record the revaluation entries.Omit descriptions.Then,determine the capital balances of the two existing partners after the revaluation is made.


Definitions:

Total Contribution

Total Contribution refers to the sum of all contributions or payments made to a designated entity or account, such as a retirement fund or charitable organization.

AGI

The total income earned by an individual, subtracting specific deductions, used to calculate how much income tax is owed.

Deductible Contribution

An investment into a qualified account, such as an IRA or 401(k), that can be subtracted from gross income to reduce taxable income.

Highly Compensated Employees

Employees who receive compensation above a specific threshold set by the IRS, subject to certain retirement plan rules.

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