Nancy Conradt and Chris Russell Are Partners Who Share Profits

question 63

Essay

Nancy Conradt and Chris Russell are partners who share profits and losses in the ratio of 60:40, respectively. On December 31, 2019, 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.

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Definitions:

Cash Offer

A proposal to buy assets or securities for cash, rather than through the exchange of shares or other forms of compensation.

Rights Equivalent

A representation of the number of rights needed to buy one share at a discounted price during a rights issue, reflecting the value of these rights.

Subscription Price

The set price at which investors can buy shares of a stock or fund before they are offered to the public.

Market Price

This is the current price at which an asset or service can be bought or sold.