Quiz

1. Bian and Minda are partners in a retail business and divide profits 60 percent to Bian and
40 percent to Minda. Their capital balances at December 31, 2016, are as follows:
Bian capital $90,000
Minda capital 90,000
Total capital $180,000
Partnership assets and liabilities have book values equal to fair values. The partners agree
to admit James into the partnership. James purchases a one-third interest in partnership
capital and profits directly from Bian dan Minda (one-third of each of their capital
accounts) for $75,000.
Required: Prepared journal entries for the admission of James into the partnership,
assuming that partnership assets are revalued.
2. The partnership of Denver, Elsie, Fannie, and George is being liquidated over the first
month of 2016. The trial balance at January 1, 2016, is as follows:

Required: Prepare a schedule of safe payments for the Denver, Elsie, Fannie, and
George partnership for January 31, 2016.

3. What is the purpose of a statement of affairs, and how are assets valued in this statement?