Admisson

operating profitably, has had a cash flow problem. Unable to meet

its

borrowed $34,000 from a bank giving a long-term note. During a

recent

to obtain additonal cash by admiting a new partner to the firm.

They feel

attractive investment, but that proper management of their liquid

assets will be required.

in the firm if her chief accountant can reiew the accounting

records of the partnership.

31, 2008, is as follows:

Assets                                                                          

depreciation)

depreciation)

Total

Libalities and

Capital                                                

2008)

resulted in the accumulation of the following information:

accounts receivable are uncollectible. The old partnership had been

using

accounting for bad debts.

the inventory is $41,250.

land based on a current appraisal is $65,000.

using an unreasnably long estimated life in establishing a

depreciation policy

basis of sound value (current replacement cost adjustment for

use.), the value

$32,750.

accrued liabilities of $3,275.

          The

parthners agree to recognize the foregoing adjustments to the

account. Cox, Andrews, and

40.30.30. After the admission of Meyers, the new profit agrement is

to be 30.20.30.20.

capital interest in the partnership after she invest sufficient cas

to increase

$150,000. Because of the uncertainty of the business, no goodwill

is to be

Meyers is admitted.

journal entries on the books of the old partnership to adjust the

accounts.

Meyers.

giving effect to the foregoing requirements.