Conley and Liu Allow Lepley to Purchase a 25% Interest

question 13

Essay

Conley and Liu allow Lepley to purchase a 25% interest in their partnership for $50,000 cash. Conley and Liu both have capital balances of $55,000 each, and have agreed to share income and loss equally. Prepare the journal entry to record the admission of Lepley to the partnership.

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Definitions:

Preprinted Promissory Note

A legally binding document that acknowledges debt and promises repayment, which comes in a standardized form.

Payable

Refers to an amount of money that is owed and should be paid.

Bankruptcy

A legal process by which individuals or entities who cannot repay debts to creditors may seek relief from some or all of their debts.

Discharge

The termination of an obligation, such as a contractual duty or a financial debt, usually upon the completion of the terms agreed upon.