 So here's M's capital account, here's M's capital account here. It's a credit. We're going to debit it. That'll make it go down. So we're going to say this equals the 9,000. That should make this go down to, down to the 142.2. Let's see if that's what happens when we select enter. Goes down to 142.2. Then we're going to be here. We're going to post the B's capital account. Here's B. Here's the capital. That's a credit. We're going to do the opposite thing to it. Debit. It should go down. We're going to say that equals the 6,000. Once we hit enter, the capital account we would hope would go down to the 118.2. See if that's what happened. The 124.2 enter goes down to 118.2. Then we're going to post the L. Here's L. Here's L. Here's what we're going to post L. We're going to say this equals and we're going to point to that 15. What's going to happen when we hit enter? It should go down to the 249.6. Let's see if that's what happens. Down to the 249.6 and we are back in balance. If we add up all of our capital accounts now, they tie out to 680, which ties out to 680 over here. We're going to look at one more scenario now. We're going to have the same situation. We're going to add a new partner, a new partner still being R. We're still going to put R on the books at a 25% interest. However, now R is going to pay us 270,000 instead of 140,000. You can see that the reverse kind of thing is going to happen here. Let's see what happens under this scenario. Once again, let's start out by looking at the trial balance and thinking about what we do know. If we look at the trial balance over here, we can see that we have these three partners on the books and we're going to implement R. We're going to put R on the books. R is going to pay the company cash. When we ask our first question, is cash affected? Yeah, the company, the partnership is going to get cash from R in order to give R the 25% interest. Therefore, cash is going to go up. How are we going to make cash go up? We do the same thing to it as what it is. It's a debit. Therefore, we're going to debit it. We're going to copy that. I'm going to right-click and copy it. Put our cursor in I59, right-click, and paste it 123. There's that. We know it's going to go up by how much? How much is they going to pay us 270? We know that cash is going to go up by 270. We also know that we're putting a new partner on the books. Who's the new partner? R. R is the new partner. We know that all capital accounts have credit balances unless they're overdrawn, which that's not the case when they first come in and put in money. We're going to say that R has to have a capital account that's going to be credited to make it go up. That means that we're going to credit the capital accounts. I'm going to copy that. I'm going to put that down here and right-click and paste 123. We know that we are going to credit the capital account, but the tricky thing is we're not necessarily going to credit it for the 270. We're going to credit it for 25% interest of the partnership. What is a 25% interest right now? Well, we know that the book value is the equity section. So if we took the 550 of assets minus the 10, that means that we have 540 of net assets. That's the same as the equity account. 540. Equity account is the net assets of the company. Right now, we would say times .25, that would be a 25% interest, 135. However, the new partner is going to put in another 270, which is going to, of course, increase the amount of assets in the book. We'll do a quick calculation to see what 25% interest of the net assets will be after R puts in the added 10,000 or whatever money that we just said they're going to put in, which is the 270. So let's come to our worksheet over here. We got our capital accounts reflected here, here, here, total capital, which represents the book value assets minus liabilities of 540. And then the new partner is going to put in 270,000. Therefore, the book value, the assets minus the liability, meaning the total equity, is going to go up by 272 equals the 540 plus the 270. That will equal the 810. So now we're going to be at 810. And now we're going to say that's the new net value of the partnership. We're going to give R a 25% interest, .25. If we want to make that a percentage, we can go to the home tab. We can go to the numbers group and we can select the percentage. And we're going to give R 25% interest. Therefore, we're going to say this equals the 810 times the 25% interest. Means that R is going to be on the books at 2025. So that's the answer to this question over here. We're going to credit not the amount of cash that was received for R's capital account, not 270, but the 2025. So we were going to credit negative for the credit for this worksheet, 2025. And now, of course, we have a problem in that the debits do not equal the credits. The debits are greater than the credits by 67.5. So we need another credit of 67.5 in order for our journal entry to be in balance. What are we going to credit for 67.5? The three other partner capital accounts. So because we put R on the books for 25% interest, which is 2025. And they paid more than that. They paid 270. These other three partners are going to get an increase to their a bonus to their capital accounts by the difference because we're going to have to increase them with another credit. So we're going to credit these three. This is good for these three partners. And again, you might be asking, why would R pay 2025? I mean, why would R pay 270,000 when they're only getting a net assets of 2025? I mean, we could see right now what the book value of the company's worth. It's worth 810. A 25% interest is 2025. Why would the partner come in and pay 270? And again, there could be multiple reasons. There could be intangible type of assets or liabilities that are not reflected or thinking that there are going to be some types of assets and liabilities that are not valued correctly. And or there could be the idea that R is thinking, hey, this is a good partnership and they have a lot of income potential in the future. And therefore, R is willing to pay a premium, pay more than just the book assets because they're counting on future revenue that will outweigh that. So whatever the agreement is or why they came to it, this is very common that this will happen. And so we're going to have to record this and adjust the capital accounts. So let's see how we're going to do that then. If we go down here and we're going to say we're going to have to make this adjustment again, what will the adjustment be for? Well, we R paid the partnership 270 minus what we're going to give R in terms of the capital, 2025, means that we've got 67.5. We're going to have to allocate that. That's our plug number, remember, that we're going to need over here. But we're going to have to allocate it to these three partners, MBL, by the partnership percent, 30, 20, 50. So let's do that. We're just going to allocate that out. We're going to say this equals the 67.5 times the 30% and tab. So we're going to increase M's capital account by the 20,250. Then for B, we're going to say this equals the 67.5 times the 20% and tab. So we're going to increase B's capital account from 124.2 by 13.5. Then L equals the 67.5 times the 50% and enter. That means the 264.6 is going to go up 33,750. So what's going to be the new capital accounts then are, it's going to be on the books for what we decided to allocate, which is 25% of the 810 or the 2025. And M's going to be on the books for equals the beginning capital plus what we're going to increase the capital balance by their portion of that 67.5. Then we're going to have B's capital account will be the beginning balance 124.2 plus the amount of the 67.5 we allocate or 13.5 tab. Then L is going to equal the beginning balance for L of 264.6 plus the amount of the 67.5 we allocate of 33,750. Therefore, we're going to have new capital account balances after we record the entry of RMBL equaling 810, which is of course this 810 up here. And then we can sum that up equals the sum of this enter that gives us the 810. All right, so at the end of the day, R should be on the books for this, M, B, and L should be on the books for these numbers respectively. Let's see if that's what happens. So we're going to scroll over here and remember what we were left with on our journal entry is the fact that we need a credit of 67.5. Here's the 67.5. Here's how we're going to allocate it between M, B, and L. So once again, I'm going to highlight M, B, L. I'm going to right click, copy that, going to scroll down here to I to 61, right click and paste it 123. And then we're just going to put these numbers in respectively. So I'm going to put in case 61. I want a negative of this 20,250. Just make sure for the purposes of recording, we're going to represent the credits with negative or bracketed numbers. B is going to equal or negative of the 13.5. We're going to credit B, 13.5. And we're going to credit the L's capital count by the 33, 750 and enter. So are we in balance now? Let's see. If we take a look at the credits, we're at 270. That equals the debits. We can also highlight the debits minus the credits equal zero. So we are in balance. Let's post this out and see what if it does what we think it should do. What do we think it should do? We think that our capital account should end up to be that M's capital account that B that L that and then we should have a total capital of the 810 which also represents the book value, the assets minus liability of the company. All right. Partnership. I should say of the partnership. All right. So let's post this out. We're going to post cash first. So cash is up here. So we are in 059, 059 equals. We're going to point to that 270. That's a debit. This is a debit. It's going to make a debit go up in the debit direction to the 820. Then we're going to post ours capital. So ours capital is here. Our capital here. We're going to post it in the blue area in 064 equals. We're going to point to that 2025. Going to bring this balance up to 2025. Then we're going to post M. Here's M here. Here's M here. Here's what we're going to post it in 061 equals. We're going to point to that 20,250 and enter. So it goes up from 151.2 to 171.450. That should be reflected down here 171.450. Then we're going to post B's capital account here. So here's B capital account there. We're going to post it into our blue section equals. We're going to point to B's capital should increase the capital to the 137.7 which equals to 137.7 in our worksheet. Then L. Here's L. Here's L. Here's what we're going to post L in 063 equals. And we'll point to that 33750 bringing the balance up to the 298.350 equaling the 298.350 here. If we see what the total adds up to, we're going to highlight these adds up to 810. That's the 810 here. Now also remember represents the book value represents the assets minus the liabilities 810 equals the equity 810. And that is that.