The following balance sheet is for the partnership of Allen, Bill, Charles, and Don, whoshare profits in the ratio of 5:2:2:1.AssetsCash $ 90,000Other assets 594,000$684,000Liabilities and capitalLiabilities $184,000Allen capital 300,000Bill capital 90,000Charles capital 60,000Don capital 50,000$684,000Required:PART AThe partners consider that the book values of the partnership net assets are fairly representativeof current market values. They have agreed to admit Earl into the partnership.Earl will invest $115,000 for a 20% interest in capital.(a) By means of journal entries, indicate the possible ways of recording the admissionof Earl to the partnership.(b) Evaluate each of the journal entries you have prepared.PART BThe partners decide to liquidate the business rather than admit Earl. Don received a totalof $7,250 during the liquidation process, which is now complete. Calculate how muchAllan, Bill, and Charles each received.
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