Chante and Olivia Decide to Accept Sherwood into the Partnership

question 41

Essay

Chante and Olivia decide to accept Sherwood into the partnership.Sherwood will contribute $25,000 in cash,which will also be the amount to be credited to his capital account.Prepare the journal entry to record the transaction.

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Definitions:

Partition

The division of real property among co-owners so that each owns a specific portion of the property, or the sale of such property and division of proceeds among co-owners.

Voluntary Act

An action undertaken by an individual with full awareness and of free will, without coercion.

Joint Tenant

A co-owner of a property where each tenant has an equal share and rights, with the stipulation that upon the death of one tenant, their share automatically transfers to the surviving joint tenant(s).

Fee Simple Absolute

The most complete form of ownership of real property, which includes the total bundle of rights without duration limit and with the freedom to use or dispose of the property as the owner sees fit.