EX 12-10 Admitting new partners

Lily Yuan and Kayla Dunn are partners who share in the income equally and have capital balances of $180,000 and $62,500, respectively. Yuan, with the consent of Dunn, sells one-third of her interest to Rachel Burnett. What entry is required by the partnership if the sales price is (a) $40,000? (b) $80,000?

Answer:
a. and b.
Lily Yuan, Capital.......................................  60,000
Rachel Burnett, Capital............................................    60,000
$180,000 × 1/3.

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